Peer Review Report Phase 1 Legal and Regulatory Framework - The Bahamas

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes

OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: THE BAHAMAS
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange
of information is carried out by over 100 jurisdictions which participate in the work of the
Global Forum on an equal footing.
Peer Review Report
The Global Forum is charged with in-depth monitoring and peer review of the
implementation of the standards of transparency and exchange of information for tax
Phase 1
purposes. These standards are primarily reflected in the 2002 OECD Model Agreement
on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the
Legal and Regulatory Framework
OECD Model Tax Convention on Income and on Capital and its commentary as updated in
2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
THE BAHAMAS
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information
Peer Review Report Phase 1 Legal and Regulatory Framework THE BAHAMAS
must be provided, including bank information and information held by fiduciaries,
regardless of the existence of a domestic tax interest or the application of a dual
criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum
as relevant to its work, are being reviewed. This process is undertaken in two phases.
Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for
the exchange of information, while Phase 2 reviews look at the practical implementation of
that framework. Some Global Forum members are undergoing combined – Phase 1 plus
Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the
international standards of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus
represent agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please visit
www.oecd.org/tax/transparency.
Please cite this publication as:

OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes
Peer Reviews: The Bahamas 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD Publishing.
http://dx.doi.org/10.1787/9789264108295-en
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23 2011 17 1 P -:HSTCQE=VU]W]]:
232011171covBAHAMAS.indd 1 11-Apr-2011 10:26:16 AM
Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Bahamas 2011
PHASE 1
April 2011
(reflecting the legal and regulatory framework
as at November 2010)
This work is published on the responsibility of the Secretary-General of the OECD.
The opinions expressed and arguments employed herein do not necessarily reflect
the official views of the OECD or of the governments of its member countries or
those of the Global Forum on Transparency and Exchange of Information for Tax
Purposes.

OECD (2011), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer
Reviews: Bahamas 2011: Phase 1, OECD Publishing.
http://dx.doi.org/10.1787/9789264108295-en
ISBN 978-92-64-10828-8 (print)

ISBN 978-92-64-10829-5 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviews
ISSN 2219-4681 (print)
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TABLE OF CONTENTS – 3
Table of Contents
About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Information and methodology used for the peer review of The Bahamas. . . . . . . 9
Overview of The Bahamas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
B.1. Competent Authority’s ability to obtain and provide information . . . . . . . . 46
B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 49
C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
C.1. Exchange-of-information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
C.2. Exchange-of-information mechanisms with all relevant partners . . . . . . . . 56
C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . 59
C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 60
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – THE BAHAMAS © OECD 2011
4 – TABLE OF CONTENTS
Summary of Determinations and Factors Underlying Recommendations. . . . 63
Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 67

Annex 2: List of All Exchange-of-Information Mechanisms in Force . . . . . . . 69
Annex 3: List of all Laws, Regulations and Other Material Received . . . . . . . 70
ABOUT THE GLOBAL FORUM – 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax

Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 90 jurisdic-
tions, which participate in the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of
the implementation of the international standards of transparency and exchange
of information for tax purposes. These standards are primarily reflected in the
2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article 26 of the OECD Model Tax Convention on
Income and on Capital and its commentary as updated in 2004. The standards
have also been incorporated into the UN Model Tax Convention.
The standards provide for international exchange on request of foresee-
ably relevant information for the administration or enforcement of the domes-
tic tax laws of a requesting party. Fishing expeditions are not authorised but
all foreseeably relevant information must be provided, including bank infor-
mation and information held by fiduciaries, regardless of the existence of a
domestic tax interest.
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed. This process is
undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s
legal and regulatory framework for the exchange of information, while Phase 2
reviews look at the practical implementation of that framework. Some Global
Forum members are undergoing combined – Phase 1 and Phase 2 – reviews.
The ultimate goal is to help jurisdictions to effectively implement the interna-
tional standards of transparency and exchange of information for tax purposes.
All review reports are published once adopted by the Global Forum.
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the pub-
lished review reports, please refer to www.oecd.org/tax/transparency.
EXECUTIVE SUMMARY – 7
Executive Summary
1. This report summarises the legal and regulatory framework for trans-
parency and exchange of information in The Bahamas.
2. The international standard which is set out in the Global Forum’s
Terms of Reference to Monitor and Review Progress Towards Transparency
and Exchange of Information, is concerned with the availability of relevant
information within a jurisdiction, the competent authority’s ability to gain
timely access to that information, and in turn, whether that information can
be effectively exchanged with its exchange of information (EOI) partners.
3. The Bahamas has worked with the OECD in respect of tax informa-
tion exchange since 2002 when it committed to implementing the interna-
tional standards of transparency and information exchange. The Bahamas
does not have direct taxation and consequently the usual framework for tax
authorities to have access to information for income tax purposes is not in
place. In 2009, The Bahamas renewed its commitment which it then worked
quickly to implement and by March 2010 it had concluded more than 12
tax information exchange agreements (TIEAs). As at November 2010, The
Bahamas has an exchange of information (EOI) network covering 22 jurisdic-
tions; seven of these agreements are presently in force, and The Bahamas has
taken all steps for its part which are necessary to bring the remaining agree-
ments into force. Recently concluded, these agreements, with the exception
of its TIEA with the US, are based on the OECD’s 2002 Model TIEA.
4. The principal concern identified in the report relates to the availabil-
ity of accounting information and the report notes that essential element A.2.
of the Terms of Reference is not in place. The shortcomings in the legislative
requirements to retain accounting records in respect of international business
companies, partnerships, authorised purpose trusts and foundations are such
that this information may not be available in certain cases in respect of these
entities and arrangements. In respect of the remainder of the report, each of
the elements is found to be in place. For some elements, recommendations
have been made concerning ownership and identity information (element
A.1.), access powers (element B.1.) and appeal rights (element B.2.).
8 – EXECUTIVE SUMMARY
5. Whilst The Bahamas’ commitment to the international standard is

not in doubt, with The Bahamas having taken all necessary steps to bring
the TIEAs it has signed into force, it is unclear whether some provisions
in its domestic law may hinder its ability to achieve effective exchange of
information in all instances. The availability of accounting records is an
essential component of effective EOI, and the present legal and regulatory
framework does not meet the standard in this regard. The Bahamas’ progress
in these areas, as well as its actual practice in exchange information with its
EOI partners, will be considered in its Phase 2 review which is scheduled to
commence in the second half of 2012.
INTRODUCTION – 9
Introduction
Information and methodology used for the peer review of The Bahamas
6. The assessment of the legal and regulatory framework of The

Commonwealth of The Bahamas (The Bahamas) was based on the interna-
tional standards for transparency and exchange of information as described
in the Global Forum’s Terms of Reference, and was prepared using the Global
Forum’s Methodology for Peer Reviews and Non-Member Reviews. The
assessment was based on the laws, regulations, and exchange of information
mechanisms in force or effect as at November 2010, other materials supplied
by The Bahamas, and information supplied by partner jurisdictions.
7. The Terms of Reference break down the standards of transparency
and exchange of information into 10 essential elements and 31 enumerated
aspects under three broad categories: (A) availability of information; (B)
access to information; and (C) exchanging information. This review assesses
The Bahamas’ legal and regulatory framework against these elements and
each of the enumerated aspects. In respect of each essential element a deter-
mination is made that either: (i) the element is in place, (ii) the element is
in place but certain aspects of the legal implementation of the element need
improvement, or (iii) the element is not in place. These determinations are
accompanied by recommendations for improvement where relevant.
8. The assessment was conducted by an assessment team, which con-
sisted of two expert assessors: Mr Philippe Cahanin, Deputy Director in
the Large Business Audit Branch of the French Revenue Administration;
and Mr Malcolm Campbell, Comptroller of Taxes for the Jersey Competent
Authority; and one representative of the Global Forum Secretariat, Miss
Caroline Malcolm. The assessment team assessed the legal and regula-
tory framework for transparency and exchange of information and relevant
exchange of information mechanisms in The Bahamas.
10 – INTRODUCTION
Overview of The Bahamas
10. The Bahamas is an archipelago extending across the western

Atlantic Ocean and consisting of 700 islands and cays with an area of 13 878
square kilometres. Thirty of the islands are inhabited, with a population of
approximately 320 000 persons, mainly concentrated on the islands of New
Providence (on which the capital, Nassau, is situated) and Grand Bahama.
11. The Bahamas achieved independence from Great Britain on 10 July
1973 and is now a self-governing, sovereign member of the Commonwealth
of Nations and a member of the United Nations.
12. Queen Elizabeth II is the titular head of state in The Bahamas, rep-
resented by a Governor-General. Legislative power is vested in a bicameral
parliament which consists of a 41-member House of Assembly (the lower
house) and a 16-member Senate. The House of Assembly carries out all major
legislative functions. The Prime Minister may dissolve Parliament and call a
general election any time within a 5 year term.
13. The Bahamas has a written constitution that was published when it
gained its independence in 1973 and which is the supreme law of the land.
All other laws must be consistent with the Constitution to be enforceable. The
Constitution empowers parliament to make laws by the passing of bills, which
must be passed by the House of Assembly and Senate, and be agreed by the
Governor-General before becoming law.
14. Historically, the basis of the Bahamian law and legal system is the
English common law. The judiciary is independent of the executive and the
legislature. Judicial authority is vested in the Judicature, which comprises
Magistrate Courts, the Supreme Court, the Court of Appeal and the UK’s
Judicial Committee of the Privy Council as the final court of appeal.
15. The Bahamas imposes no taxes on income. Instead, it derives revenue
principally from indirect taxation on economic activity in the form of import,
export, excise and stamp duties and direct taxes on tourism-related items.
Another major source of revenue for the government is business license fees,
which are determined in relation to the size and profits of a business operat-
ing in or from The Bahamas.
16. The Bahamas’ currency is the Bahamian dollar (BSD), which is
pegged to the U.S. dollar at parity. The US dollar is also accepted in The
Bahamas, but the Bahamian dollar is not legal tender outside of The Bahamas.
17. The Bahamian economy is service based, with tourism and financial
services the leading industries and sources of employment. The Bahamas’
gross domestic product was approximately BSD 7 billion in 2009, of which
tourism made up 40% and financial services 20%. Over half of the Bahamian
INTRODUCTION – 11
workforce was employed in the tourism industry in 2009, with the financial
services sector accounting for approximately 3-4% of employment.1
Overview of The Bahamas’ commercial laws and financial sector

18. The Bahamas has a large financial services industry offering both
resident and non-resident services and which is dominated by the banking and
trust company sector. As of 30 September 2010, there are approximately 240
international banks and trust companies registered in The Bahamas which
hold BSD 516 billion in assets on their balance sheet. In addition, there are 38
domestic banks and trust companies which hold BSD 9.89 billion in assets.
The Central Bank of the Bahamas is responsible for regulating all banking
and trust companies. Banking businesses must be carried on by companies,
trust services may be conducted by individuals, and in those instances the
individuals are regulated separately under the Financial and Corporate
Service Providers Act.
19. The investment fund and insurance sectors also make a signifi-
cant contribution to The Bahamas’ economy. The Securities Commission
regulates the securities and investment funds industry, which includes as at
December 2009,764 licensed investment funds and 64 licensed investment
fund administrators holding assets valued at almost BSD 190 billion. The
insurance industry in The Bahamas as at December 2008, is comprised of 174
insurance companies and licensed agents with BSD 2.283 billion in assets,
and is regulated by the Insurance Commission.
20. In respect of anti-money laundering/counter-financing of terrorism
(AML) obligations, the Compliance Commission has supervisory responsibil-
ity as part of an arrangement with the Inspector of Financial and Corporate
Services for financial and corporate service providers (FCSPs) and for desig-
nated non-financial businesses and professionals (DNFBPs), whilst the licens-
ing regulators such as the Securities Commission, Insurance Commission and
the Central Bank supervise compliance with AML obligations for the sectors
which they regulate.
Overview of The Bahamas’ framework for the exchange of

information for tax purposes
21. There are two main laws governing international cooperation for tax
matters in The Bahamas: The Bahamas and the United States of America
Tax Information Exchange Agreement Act 2003, and the International Tax
1. Data taken from The Bahamas’ Central Bank Quarterly report to March 2010,
and the Labour force survey to December 2009.
12 – INTRODUCTION
Cooperation Act 2010 which gives effect to all other TIEAs signed by The
Bahamas.
22. The legal authority to exchange information for tax purposes derives
from Tax Information Exchange Agreements (TIEAs) once these agree-
ments become part of domestic law. As at November 2010, The Bahamas
had signed TIEAs with 22 jurisdictions, of which seven agreements are cur-
rently in force. Sixteen of these agreements are with OECD members, and 12
of them have been signed since the beginning of 2010. Most recently it has
signed agreements with Australia, Germany and Canada. By enacting the
International Tax Cooperation Act in July 2010, The Bahamas has now taken
all necessary steps to bring each of the remaining 21 agreements into force.
23. In addition to its TIEA network, cooperation in criminal tax matters
may be provided in accordance with the provisions of the Criminal Justice
(International Cooperation) Act; and the terms of the mutual legal assistance
treaties with the United States and Canada under the Mutual Legal Assistance
(Criminal Matters) Act 1988.
Recent developments
24. As noted above, The Bahamas passed the International Tax Cooperation
Act (ITC Act) on 1 July 2010, which gives effect to tax treaties signed by
The Bahamas. Further, recent amendments to the United States of America
Tax Information Exchange Agreement Act now permits the US competent
authority to conduct tax examinations in The Bahamas consistent with pro-
visions contained in the OECD 2002 Model Agreement on the Exchange of
Information in Tax Matters, and brings the arrangements into line with the
options available to the competent authorities of The Bahamas’ other EOI
partners, under the ITC Act.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 13
Compliance with the Standards
A. Availability of information
Overview
25. Effective exchange of information requires the availability of reliable

information. In particular, it requires information on the identity of owners
and other stakeholders as well as accounting information on the transactions
carried out by entities and other organizational structures. Such information
may be kept for tax, regulatory, commercial or other reasons. If information
is not kept or the information is not maintained for a reasonable period of
time, a jurisdiction’s competent authority may not be able to obtain and pro-
vide it when requested. This section of the report assesses the adequacy of
The Bahamas’ legal and regulatory framework on availability of information.
26. In respect of ownership and identity information, the requirements in
The Bahamas to retain relevant information in respect of companies, partner-
ships, trusts and foundations are sufficient to meet the international standard. An
exception, contained in the binding Security Commission guidelines, for invest-
ment funds to the client identity information requirements of the AML regime
make it unclear whether such information for all funds is required to be kept,
regardless of their legal form. However, The Bahamas notes that the guidelines
are inconsistent with the regulations on this issue and the regulations will take
precedence. Noting The Bahamas significant investment fund industry, it is
recommended that The Bahamas clarify their legal requirements in this regard.
Essential element A.1. of the Terms of Reference is found to be in place.
14 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION
27. The requirements under The Bahamas’ law in respect of accounting

records do not fully meet the standard described in element A.2. of the Terms
of Reference. Of particular concern is the insufficiency of the obligations
applicable to international business companies (IBCs), partnerships, author-
ised purpose trusts and foundations in the context of more than 162 912 IBCs2
alone which are registered in The Bahamas. Moreover, in respect of private
general companies and foreign-incorporated companies registered in The
Bahamas, the obligation to keep underlying documentations and an express
requirement to retain records for 5 years is not established.
28. In respect of banks and other financial institutions, the application
of the anti-money laundering/counter-financing of terrorism (AML) regime
to these entities ensure that all relevant records pertaining to customers’
accounts and transaction information is available for all account-holders. This
element (A.3. of the Terms of Reference) is found to be in place.
29. In general, where an obligation exists in The Bahamas for relevant
records to be kept, there are enforcement provisions in place to address
the risk of non-compliance. Enforcement options include fines, licensing
conditions or revocation, and imprisonment. In respect of certain sanctions
imposed on exempted limited partnerships and foundations however, the
penalties which may be imposed are significantly lower than in the case of
penalties imposed on other persons. The effectiveness of these enforcement
provisions will be considered as part of The Bahamas’ Phase 2 review.
A.1. Ownership and identity information
Jurisdictions should ensure that ownership and identity information for all relevant
entities and arrangements is available to their competent authorities.
Companies (ToR 3 A.1.1)

30. Companies may be incorporated and registered in The Bahamas under
either the Companies Act 1992 (Companies Act, such companies herein referred
to as a General Companies or GCs) or the International Business Companies Act
2000 (IBC Act, such companies herein referred to as IBCs), and may be limited
liability (by shares or guarantee), or unlimited liability companies. Additionally
a subset type of company, the segregated account company (SAC), may be
incorporated under either the Companies Act or the IBC Act.
2. Of which 42,825 are “active” IBCs i.e. with registration fees paid up to date.
Figures as at 30 November 2010.
3. Terms of Reference to Monitor and Review Progress Towards Transparency and
Exchange of Information.
General Company
31. A General Company must have at least 60% of its ultimate owners as
Bahamian residents to be a Bahamian company.
International Business Company

32. An IBC has no minimum residency requirement in respect of share-
holders, and may be established for a fixed limited duration under Part X
of the IBC Act. An IBC may only be incorporated by, and must at all times
have a registered agent resident in The Bahamas which is a licensed bank or
trust company, or a licensed financial and corporate service provider (FCSP)
(sections 4 and 38, IBC Act). There are no residency requirements in respect
of IBC directors or shareholders. It is exempt from stamp duty, and all other
taxes and estate duties for 20 years from the date of incorporation.
Segregated Account Company

33. The specific rules governing an SAC are set out in the SAC Act 2004
(SAC Act), in addition to which either the Companies Act or IBC Act will
apply. A SAC must appoint and maintain a representative in the Bahamas
(s10, SAC Act), who must be resident in the Bahamas and a Regulated
Licensee or licensed bank or trust company. Where there is a failure to notify
the relevant regulator of a change in this representative, that regulator “shall”
recommend to the Registrar that the SAC be deregistered (s11, SAC Act).
34. An SAC is made up of segregated accounts (SAs) which each have
their own assets and liabilities maintained separately from other SAs and
from the company’s general assets and liabilities. Each SA may also have its
own owners however each SA is not a separate legal entity from the SAC.
35. A SAC must be an investment fund; engaged in the business of issu-
ing securities or insurance; be a subsidiary of a licensed bank or trust com-
pany; or carry on some other business if written consent is obtained from a
regulator (s3, SAC Act).
Company ownership and identity information required to be provided

to government authorities
36. The Companies Registrar maintains registers of all companies reg-
istered under the Companies Act, all IBCs and all SACs. The Companies
Registrar does not maintain a register of SAs within a SAC. At the time
of incorporation, all Bahamian companies must register and provide their
memorandum of association to the Registrar.
37. For a GC, a memorandum must specify the location of its registered
office (which must be in the Bahamas), the amount of capital and the number
and value of its shares (sections 5-8, Companies Act), and any change to these
details must be advised to the Registrar within 14 days (s9, Companies Act).
A GC must also file its articles of association within 6 months of incorpora-
tion (s14, Companies Act). In addition, a GC is subject to an obligation to
file an annual return with the Registrar which includes the name, address
and occupation of all legal owners, as well as any person who ceased to be
an owner during the previous year, and to confirm that 60% of its shares are
ultimately owned by Bahamian residents.
38. In the case of an IBC, as well as its memorandum, it must also provide
its articles of association to the Registrar at the time of incorporation. The mem-
orandum must contain details including the location of the registered office and
registered agent of the company, the amount of capital and the number and class
of shares. An IBC must provide the Registrar with an authenticated copy of its
Memorandum or Articles within 28 days of any amendment (s18, IBC Act).
39. Failure by either a GC or an IBC to file any required document car-
ries a penalty of BSD 10 000 or up to 2 years imprisonment (sections 292-
293, Companies Act; and sections 181-182, IBC Act).
Foreign companies
40. Once a foreign-incorporated company is carrying on an “undertak-
ing” or has a “trading branch” in The Bahamas, Part VI of the Companies
Act will apply, and it is required to register with the Registrar of Companies.
In order to be registered, the foreign company must file certain information
with the Registrar, including:
a copy of its memorandum or articles of association;
full address of the principal office of the company, both within and
outside of The Bahamas;
full name, address and occupation of each of the directors of the
company.
41. The foreign company must also maintain a registered office in The
Bahamas, and its address must be notified to the Registrar (s181, Companies Act).
42. Following registration, the foreign company must meet all of the obli-
gations imposed on General Companies incorporated and registered under the
Companies Act which relevantly includes maintaining an up to date register
of shareholders. A foreign company which is registered in The Bahamas may
in turn establish as an IBC and in that case would be subject to the IBC Act
obligations.
Company ownership and identity information required to be held by

companies
43. All Bahamian registered companies must maintain an up to date reg-
ister of shareholders (s56, Companies Act; and s29, IBC Act), and a failure to
do so carries a penalty of BSD 10 000 or up to 2 years imprisonment (s297,
Companies Act; and s180, IBC Act). The register must include:
name, and address of all members
the number of shares, distinguished by class, held by each member;
and
the date the person became and ceased to be, a member
44. In respect of IBCs, under s31 of the IBC Act shares may be trans-
ferred, not necessarily by a written instrument: s31(2); and such a transfer is
not required to be notified to the company. Under s31(3), the company “shall
not be required to treat a transferee… as a member until the transferee’s name
has been entered in the Share Register”, which leaves open the possibility
that the IBC may elect to treat the transferee as a member, notwithstanding
that their name is not in the share register. However, as all IBCs are required
to have a registered agent subject to the AML regime, that AML Service
Provider is required to know and verify the owners of the IBC.
45. Companies registered under the Companies Act (including general
registered foreign companies) must also maintain information which will
enable them to meet the obligation to file an annual return with the Registrar.
46. All SACs must maintain a register of its owners, as well as a register
of the owners of each of the individual SAs (s27, SAC Act). These registers
must be maintained in line with the obligations under the Companies Act and
the IBC Act as applicable.
47. Ownership and identity information on companies in The Bahamas
is generally available through a combination of requirements imposed by
The Bahamas’ company formation laws, AML laws and its laws regulating
financial and corporate service providers.
Nominee identity information

48. Where a nominee acts in respect of a beneficial owner of an IBC,
they fall within the definition of financial and corporate service provider
(s2(e), FCSP Act) who is required to keep identity information in respect of
their clients, pursuant to the regulatory laws and AML regime. In addition,
the Exchange Control Regulations provide clear requirements in respect of
nominee holdings concerning non-residents under regulation 14. Prior per-

mission from the Exchange Controller must be obtained where:
a person resident in The Bahamas does any act whereby the holder of
a security becomes his nominee in respect of the security, or whereby
he becomes a nominee for a person resident outside of The Bahamas;
a person resident in The Bahamas for whom a security is held as
a nominee, does any act by which the nominee holds the security
other than as his nominee, or for another person resident outside The
Bahamas
the nominee or his agent resident in The Bahamas does any act
by which the person for whom the nominee acts is substituted for
another person, or ceases to hold the security as nominee.
49. However, it is not clear that obtaining permission from the Controller
in these circumstances imposes a requirement that a nominee keep identity
information on the person on whose behalf the security is held. The Bahamas
notes that to date, the only nominees presenting under this provision are
licensed service providers who are already under obligations stemming from
AML and regulatory laws, to maintain identity information on persons that
they represent.
50. Where the nominee is not acting in respect of a beneficial owner of
an IBC, or the Exchange Control requirements do not create a requirement
to hold information, there are no obligations imposed on a nominee to retain
identity information on the persons for whom they act as the legal owner. In
The Bahamas’ view, the number of nominees who would fall within this class
is negligible and would not prevent effective exchange of information. The
impact of this exception on EOI will be reviewed in the Phase 2 review of The
Bahamas.
Business Licences
51. Any person who carries on any business with a view to obtaining
any amount of gross turnover in a given year must obtain a business license
under the Business License Act (BL Act). However, certain Private Trust
Companies that may otherwise fulfil this criterion will be exempt under
regulation 3 of the Banks and Trust Companies (Private Trust Companies)
Regulations. However, it is noted that PTCs are regulated by the Central Bank
(see paragraph 107).
52. At the time of application for a business licence and on an annual
basis, the BL Act requires that the applicant must provide the names of
owners of the business and the applicant’s address.
53. The penalty for non-compliance with the BL Act, including the car-
rying on of a relevant business without a licence, is either a fine of up to
BSD 10 000 or imprisonment up to 2 years. Additionally, a fine of between
BSD 250 and BSD 1 000 per day in breach may be imposed, as well as a fine
of up to five times the licence fee that would have been payable. A Court may
also order the confiscation of business goods and machinery as it sees fit.
Regulatory laws
54. Regulation of The Bahamas’ finance sectors are overseen by sector-
specific regulators. The regulatory framework is complemented by the AML
regime, and which applies to all regulated licensees in addition to some non-
licensed persons.
55. The licensing and supervision of the financial services sector is arranged
as follows: bogus note 44
Sector Regulator Main legislation
Banks and Trust Central Bank of The Banks and Trust

Companies Bahamas Companies Regulation
(NB. Non-corporate Act (BTCR Act)
commercial trust service
providers are regulated
as a “Financial and
Corporate Service
Provider)
Investment Funds and Securities Investment Funds Act

Fund Administrators4 Commission (IF Act)
Insurance Companies and Insurance Commission Insurance Act and

insurance business except External Insurance Act
national insurance
4. The Bahamas has foreshadowed that it will consolidate the non-bank regulators
although the date for the conclusion of this reform exercise is not yet determined.
Such changes are not anticipated to materially affect the relevant obligations
imposed on licensed entities.
Sector Regulator Main legislation
Financial and Corporate Inspector of Financial and Corporate

Service Providers5 Financial Corporate Service Provider Act
(“FCSP”, includes Services (presently (FCSP Act)
individual trust service the Securities
providers and nominees Commission)
providing services on a
commercial basis6)
Securities Dealers and Securities Securities Industry Act

Investment Advisors Commission
bogus note 55 bogus note 66

56. In addition, credit unions (which are restricted to operations in the
domestic market) are regulated by the Department of Cooperative Societies
under the Co-operative Societies Act.
57. Any person who fails to obtain a licence as required (that is, is provid-
ing a prescribed service for profit or reward) commits an offence and is liable
for significant penalties. Under section 18 of the FCSP Act for instance, such
a person will be liable upon summary conviction to a fine of BSD 75 000, and
a further BSD 1 000 per day in default.
58. Persons who are regulated pursuant to these laws with the excep-
tion of Banks and Trust Companies are referred to herein as Regulated
Licensees. The relevant ownership and identity obligations on Banks and Trust
Companies in respect of their clients only stem directly from the AML regime.
In respect of Regulated Licensees, there are applicable identity and ownership
obligations in respect of their clients, under both the regulatory laws and the
AML regime.
59. The main legislation noted in the table above is accompanied by
regulations and may be supplemented by instructions (Guidelines and Codes
5. “Financial and Corporate Services” means the provision of such services for
profit or reward either in or from within The Bahamas, and is inclusively defined
to comprise persons who register, manage or administer IBCs; conduct or carry
on “financial services”; or provide partners, registered agent or registered office
services for exempted limited partnerships. The term “financial services” is
not defined in the FCSP Act, however the Inspector of Financial and Corporate
Services has advised that the definition of the WTO will be adopted, which defi-
nition includes money broking, lending of all types and related activities.
6. Individual trustees and nominees who are not carrying on business or providing
relevant services for profit or reward are not required to be licensed, and there-
fore are not subject to the regulatory obligations.
of Practice) issued by the regulator. Specific obligations vary according to the

type of licence, however there are some general requirements in respect of
maintaining ownership and identity information on clients. Reference is made
here to the regulatory regime for FCSPs however equivalent provisions and
instructions apply to other Regulated Licensees.
60. At the time that a request for provision of services is made by a new
client, all Regulated Licensees must undertake certain checks including (s14,
FCSP Act):
Verify the identity of the prospective client; and
Obtain details of their principal place of business; business address
and telephone, facsimile and electronic contact details.
61. Further, where the client is an IBC, the Regulated Licensee must
keep a record of the name and address of all of the beneficial owners; and in
the case of an exempted limited partnership (ELP), a record of the name and
address of all partners registered under the Exempt Limited Partnerships Act.
62. In addition to these obligations, a Regulated Licensee must maintain
adequate information on file to enable it to fulfil its obligations under the
Act or any rules or regulations made pursuant to the Act (s15, FSCP Act).
An exception applies in respect of persons already subject to licensing by
a financial services regulator, in which case, for the exemption to apply the
client must produce a valid and current license.
63. Where the regulator is of the view that the Regulated Licensee is fail-
ing to meet the obligations imposed by the Act, including verifying or obtain-
ing client information, the Regulator may take necessary steps to rectify the
matter, or may suspend the licence for a period of not more than 30 days, or
up to a maximum of 60 days if it is in the public interest to do so (s16, FCSP
Act). The regulator may also revoke the licence in certain circumstances
including when he is of the opinion that the Regulated Licensee is carrying
on his business in a manner detrimental to the public interest (s17, FCSP Act).
64. Sections 18 and 18A of the FCSP Act set out the range of available
sanctions for non-compliance. Any licensee who commits an offence under
the FCSP Act or any other Act dealing with the regulation of financial ser-
vices in The Bahamas is liable to a fine of up to BSD 100 000. Any person
who contravenes the Act where no specific penalty is prescribed, is liable
on summary conviction to a fine of BSD 10 000. Failure to keep a record of
the beneficial owners of an IBC or of all registered partners in an ELP car-
ries a penalty of BSD 50 000. Any contravention of the Act with an intent to
deceive, is liable on summary conviction to a fine of BSD 100 000. Regulated
Licensees must keep all prescribed records for at least 6 years.
Investment Funds
65. With the banking and trust company sector, the investment funds
sector is a significant part of The Bahamas’ financial services industry,
holding assets valued at almost BSD 190 billion as of 31 December 2009. A
more specific regime for maintaining identity information applies to invest-
ment funds, which may take a variety of legal forms including a company
or trust. As at 30 November 2010, there were 764 investment funds in The
Bahamas, of which 698 were companies (including IBCs), 13 were trusts, and
53 were partnerships. An investment fund, is defined in s2 of the IF Act, and
must be either licensed by the Securities Commission or registered with the
Commission as a recognized foreign fund (which must be from a prescribed
jurisdiction). A different licensing process applies to fund administrators than
to the funds themselves.
66. All fund administrators are required by s32 of the IF Act to be
licensed (Regulated Licensees), except where they meet certain conditions
including that they will be administering no more than one specified fund:
s32(3), IF Act. As Regulated Licensees they are subject to the AML regime
however an exception in the AML regime provides that documentary evi-
dence in respect of client identity information will not be required in respect
of an investment fund licensed or registered in The Bahamas.7
67. There are three types of resident investment funds in The Bahamas:
“professional”, “standard”, or “SMART” funds (Specific Mandate Alternative
Regulatory Test fund). Under s11 of the IF Act, all Bahamian investment
funds must seek a licence from either the Commission, or an investment fund
administrator who holds an unrestricted license pursuant to section 34(1) of
the IF Act. An unrestricted license-holder may only issue a license for those
funds for which it is the fund administrator and provides the principal office.
In the case of self-administered funds, only the Securities Commission may
be the licensor (s8(3), IF Act).
68. Both professional and standard funds are required to appoint an invest-
ment fund administrator to provide a principal office (who is a Regulated
Licensee, noting the exception referred to in paragraph 66 concerning the
exception from documentary evidence for client identity information).
However, there is no requirement to appoint an investment fund administra-
tor for professional or standard funds which are self-administered. The person
responsible for administering a self-administered professional or standard fund
may only administer one fund and may not act as a principal in respect of that
fund.
7. See paragraph 7 of the Securities Commission Guidelines on the Prevention of

Money Laundering & Countering Financing of Terrorism), which refers in turn
to paragraph 137 (vii) of the Central Bank’s Guidelines).
69. A SMART fund is required to be registered with the Securities

Commission. It is not required to have a fund administrator, but must comply
with the written rules of the Securities Commission whereby each SMART
fund model must be approved by the Commission (there are presently 6
approved model funds) and remain subject to all the supervisory, disciplinary
and enforcement authority of the Commission. There are no pre-established
legal requirements for a SMART fund, however The Bahamas has advised
that SMART funds must satisfy the parameters and requirements of a cat-
egory, class, or type of investment fund previously approved by the Securities
Commission. The regulatory regime of SMART funds is specified in the
approval of each model. Generally they will have a limited number of inves-
tors, the class of which may be limited to professional investors, or people who
are related entities or existing clients of a fund promoter or administrator.
70. The binding guidelines issued by The Bahamas’ Security Commis-
sion create an exception from the regulations in the AML regime that would
otherwise impose client identity obligations to investment funds. The guide-
lines note that investment funds are exempt from the client identity informa-
tion requirements of the AML regime (see paragraph 66). These guidelines
note that this exemption does not apply where money laundering is known
or suspected (which does not include tax evasion as a predicate offence, or
terrorist financing). The Bahamas notes that this exception may be inconsist-
ent with the requirements of the regulations, under which the guidelines are
made and that as a matter of law, the regulations will override the subordinate
guidelines.
71. In addition to any AML requirements, obligations to keep ownership
information on investment funds will arise where required by the law under
which the fund is formed. This will be the case for example for an IBC under
the IBC Act or an Authorised Purpose Trust under the Purpose Trust Act
although it is not clear that this is the case in respect of all funds in the form
of non-Authorised Purpose trusts. With 13 investment funds in the form of
trusts in The Bahamas, managing an unknown total asset value, there are
potentially adverse consequences on the availability of information in respect
of these types of funds if these are not regulated trusts. The practical effect of
this omission will be considered in the Phase 2 Peer Review of The Bahamas.
72. Under s54 of the IF Act, the Securities Commission may conduct
regulatory hearings to determine whether there has been or is likely to be a
failure to comply with the IF Act or any regulations or rules made pursuant to
that Act. Where appropriate, the Securities Commission may take measures
including the imposition of fines of up to BSD 300 000; suspend or revoke a
fund or administrator’s licence or registration; or appoint a person to advise a
fund or administrator on the proper conduct of its affairs; or impose “any other
sanctions or remedies as the justice of the case may require” (s55, IF Act).
Anti-Money Laundering/Counter Financing of Terrorism Laws.

73. Supervision of The Bahamas’ AML regime is generally undertaken
by the licensing regulator for each sector (the Central Bank in respect of
banks and trust companies, the Securities Commission in respect of invest-
ment funds etc) except in the case of FCSPs, whose compliance with AML
obligations is overseen by the Compliance Commission. The Compliance
Commission is also responsible for overseeing compliance by “financial
institutions” providing prescribed services that are not otherwise regulated.
Herein, persons subject to The Bahamas’ AML regime whether supervised by
the Compliance Commission or another regulator, will be referred to as AML
Service Providers.
74. As noted in this report, many types of relevant entities and arrange-
ments are required to engage an AML Service Provider. For instance, an IBC
must have a resident registered agent who is a Regulated Licensee (IBC Act
s38), a trustee of an authorised purpose trust must be a Regulated Licensee,
and a foundation must have either or both, a Secretary or Foundation agent that
is a Regulated Licensee. Each of these Regulated Licensees will be subject to
the AML regime as an AML Service Provider. Even where there is no obliga-
tion to engage a Regulated Licensee, other types of entities and arrangements
such as an Exempted Limited Partnership may nonetheless do so.
75. The legislative framework of the AML regime remains the same
regardless of the relevant regulator. The key pieces of legislation are:
the Proceeds of Crime Act,
the Financial Transactions Reporting Act (FTR Act), and
the Financial Intelligence Unit Act (FIU Act).
76. This legislation is accompanied by regulations as well as other
instructions such as guidelines and codes of practice which are issued by the
regulators. Significantly, such instructions8 are legally binding (s8, FTR Act)
whereby a breach will be liable upon summary conviction to a fine of up to
BSD 10 000; or upon conviction on information, to fines up to BSD 50 000
or for subsequent offences, to BSD 100 000. The key instructions are the
Central Bank’s Guidelines (“Guidelines for Licensees on the Prevention
of Money Laundering and Countering the Financing of Terrorism”), the
Securities Commission’s Guidelines (which largely adopt the Central
8. Where issued by a Regulator that is a “relevant agency” defined as “agencies

responsible for those financial institutions mentioned in section 3(1) of the Financial
Transactions Reporting Act, 2000, including the Central Bank of The Bahamas, the
Compliance Commission, the Securities Commission, the Registrar of Insurance,
and the Gaming Board”.
Bank’s Guidelines), and AML Codes of Practice issued by the Compliance

Commission for specific sectors such as FCSPs and other designated non-
financial businesses and professions (DNFBPs).
77. AML Service Providers are subject to “know your customer” (KYC)
rules, which require them to verify the identity of all facility holders (s6, FTR
Act), persons conducting occasional transactions and extended verification
requirements where the value is more than BSD 15 000 (s7, FTR Act),9 or
where the transaction is suspected to involve proceeds of criminal conduct
(s10A, FTR Act). Verification must occur before the person becomes a client,
and where a facility is to be held by more than one person, the identity of
all persons shall be verified. There are exceptions from the requirement to
verify identity in respect of particular clients including superannuation funds,
government agencies and investment funds (see paragraph 137 of the Central
Bank’s Guidelines for a complete list of clients where full documentary evi-
dence of identity will not normally be required). These exceptions will not
apply if money laundering or terrorist financing is known or suspected.
78. Verification of the identity of any beneficial owner is also required;
however in the case of corporate entities this obligation is limited to those
beneficial owners that hold a controlling interest (regulation 7A, FTR
Regulations).10 This obligation also arises where the AML Service Provider
has reasonable grounds to believe that the person conducting the transaction
does so on behalf of another person.
79. Verification requires obtaining documentary or other evidence that
is reasonably capable of establishing a person’s identity (s11, FTR Act) and
which must be kept for 5 years, including:
full name and address;
date and place of birth; and
purpose of the account, and nature of the business relationship.
80. The Guidelines note that identity verification may require further
details depending on the circumstances of the particular case, including the
specific details appropriate where the client is a company or partnership
described in regulations 3(2), 4 and 5 of the Financial Transaction Reporting
Regulations (FTR Regulations). Following the initial verification, an AML
Service Provider is required to re-verify the identity where they have reason to
doubt the facility holder’s identity, or where there is a change in ownership or
9. Including where there is reasonable grounds to believe that transactions are being
structured to avoid the prescribed limit: s7(1)(b), FTR Act.
10. Controlling interest for the purposes of the Central Bank Guidelines and Compliance
Commission’s Codes of Practices means 10% or more shareholding in a company.
a new holder is added to the facility. All identity verification documents which
are obtained must be held for not less than five years from the end of the rela-
tionship or from the date of the transaction, whichever is longer (s24, FTR Act).
81. A breach of the customer verification obligations is an offence under
section 12 of the FTR Act, liable to a fine on the AML Service Provider of
up to BSD 20 000 for individuals, or BSD 100 000 for s body corporate. A
failure to comply with any regulation, or an instruction issued by a regulator,
upon summary conviction carries a maximum fine of BSD 10 000; or upon a
conviction on information, BSD 50 000 for a first offence, or a maximum of
BSD 100 000 for a subsequent offence.
Bearer shares (ToR A.1.2)

82. The laws of The Bahamas do not allow for the issuance of bearer
shares or any form of share warrant, certificate or coupon which is issued
to bearer, pursuant to the Exchange Control Regulations which provide in
regulation 10 that:
Except with the permission of the Controller, no person shall, in
The Bahamas, issue any bearer certificate or coupon or so alter
any document that it becomes a bearer certificate or coupon…”
83. The Bahamas has also advised that there is no record of any such per-
mission having been granted, which would be inconsistent with the Exchange
Control Department’s policy on transparency.
Partnerships (ToR A.1.3)

84. The key legislation with respect to partnerships formed in The
Bahamas is the Partnership Act of 1904, the Partnership Limited Liability Act
of 1861 (PLL Act) and the Exempted Limited Partnership Act of 1995 (ELP
Act) These laws provide for three types of partnerships:
General partnerships;
Limited liability partnerships (LLPs); and
Exempted limited partnerships (ELPs).
85. General Partnerships arise where two or more people form a rela-
tionship with a view to carrying on a business in common for profit, and are
governed by the common law except to the extent of any specific provision
of the Partnerships Act (section 47). The Partnership Act codifies some of
the laws concerning general partnerships which would otherwise be found
in the common law, and to the extent that there is any inconsistency between
a common law obligation and an obligation under the Act, the Act prevails
(s47). The Partnerships Act predominantly concerns the legal relationship of

the partnership to third parties, as well as regulating the relationship between
the partners. As with other entities or arrangements, a partnership wishing to
carry on a business in The Bahamas must comply with the Business Licence
Act (see paragraph 51).
86. LLPs may be formed by two or more persons for the purpose of
transacting a mercantile, mechanical or manufacturing business within the
Bahamas, however they may not be formed for the purpose of carrying on
banking or insurance business. At least one general partner (who may be a
body corporate) must be appointed, and other partners will be known as “spe-
cial” partners with their liability for the partnership’s debts limited to their
capital contribution. An LLP may be established for a limited duration and
must be registered with the Registrar of Records. Either in respect of General
Partnerships or LLPs, there are no requirements under The Bahamas’ law
to engage a Regulated Licensee which would trigger ownership and identity
obligations imposed by the regulatory laws or the AML regime.
87. ELPs are governed by the provisions of the Partnership Act except to
the extent of any inconsistency with the ELP Act (s3, ELP Act). ELPs shall
not undertake business with the public in The Bahamas, except to the extent
necessary for carrying on of its business exterior to The Bahamas. Pursuant
to s4 of the ELP Act, an ELP must have at least one general partner (who may
be a body corporate or partnership), and who must be resident or incorporated
in The Bahamas. The general partner may also have an additional interest as
a limited partner, and all limited partners’ liability for the partnership’s debts
is limited save as for provided in the partnership agreement. However, to the
extent provided by sub-sections 7(3) and 7(4) of the ELP Act, a limited part-
ner may participate in the conduct of the ELP. An ELP must maintain a regis-
tered office in The Bahamas (ELP Act s9) and a person who provides such a
registered office will be regulated under the AML regime (FCSP Act, s2(g).
ELPs are exempt from any business license fee, income tax, capital gains tax
or any other tax on income or distributions accruing to the partnership (ELP
Act s17). All ELPs must be registered with the Registrar of Companies (who
is the Registrar of ELPs) pursuant to section 5 of the ELP Act.
Ownership and identity information required to be provided to

government authorities
88. The ownership and identity information required to be provided to
government authorities varies for each type of partnership.
General Partnerships
89. Neither the common law nor the Partnership Act creates any obliga-
tions for general partnerships to provide any identity information to govern-
ment authorities. However, a partnership is a relationship formed for the
carrying on of a business, and when a partnership (including a General Partner-
ship) is carrying on that business in The Bahamas, it must obtain a licence pur-
suant to the Business License Act. In applying for the licence and on an annual
basis, the partnership must provide the names of the owners of the business (see
paragraph 51).
Limited Liability Partnerships

90. A LLP is formed by registration with the Registrar of Records, and
under section 4 of the PLL Act, it must file a memorandum of co-partnership
with the Registry, which must contain identify information including:
The name of the LLP, and where the business is to be carried on;
The names of each of the general partners and special partners,
identifying whether they are general or special partners, and their
respective places of residence or incorporation;
The amount of capital stock contributed by each partner; and
The duration of the limited partnership.
91. Any change to any of the particulars recorded in the memorandum,
will result in the partnership being deemed to not be a partnership with lim-
ited liability under the PLL Act. Therefore, a LLP must be dissolved, and a
new partnership formed if any such change is sought. A copy of the memo-
randum, with names of special partners deleted, is publicly available, and
all filed partnership records must be retained by the Registrar in accordance
with the Public Records Regulation.
Exempted Limited Partnerships

92. All ELPs must be registered (s5) and upon registration, information
must be provided in a signed statement by or on behalf of a general partner
(s9), including:
name of the ELP and general nature of its business;
address of the ELP’s registered office, which must be in The
Bahamas; and
full name and address of each of the general partners (including the
certificate of incorporation for a corporation).
93. A change to any of the above details must be advised to the Registrar
within 60 days; however a change whereby a person ceases to be a general
partner must be notified within 15 days (s10, ELP Act). Failure to comply
with these obligations shall incur liability on each general partner of BSD 25
per day in default.
Ownership and identity information required to be held by

partnerships
General Partnerships
94. Under s29 of the Partnership Act, partners in a General Partnership
are bound to “render true accounts and full information of all things affecting
the partnership” to any partner. It is unclear whether this obligation includes a
requirement for identity information in respect of the partners to be retained.
These types of partnerships would need to obtain a business licence and
provide identity information annually to the Business Licence Authority (see
paragraph 51).
Limited Liability Partnerships

95. An LLP must have information available at the time of registration
which allows it to provide all required information to the Registrar, including
the names and residences of all general and special partners. Any change in
this information results in dissolution of the partnership, and any resulting
new partnership must re-register and file a new memorandum.
Exempted Limited Partnerships

96. Under section 11 of the ELP Act, a general partner is required to
maintain at its registered office a list of the name and address, amount and
date of the contributions of each partner, which must be updated within 21
days of any change. Under section 11(4), failure to maintain such a register
shall incur liability on each general partner of BSD 25 per day in default.
97. The partnership must also maintain such information which allows
the general partners to meet their obligations under section 12 to provide each
limited partner, upon demand, “true and full information regarding the state
of the business and financial condition” of the ELP. However, this may be
overridden by an express or implied provision of the partnership agreement.
Trusts (ToR A.1.4)

98. Bahamian law provides for the creation of ordinary trusts (which
includes charitable trusts), and authorised purpose trusts (APTs). In addition
to The Bahamas’ common law framework under which trusts may be created
and are recognized, the relevant legislation for trusts is:
the Trustee Act of 1998, which creates obligations on Bahamian
resident trustees administering trusts, regardless of whether those
trusts are governed by Bahamian or foreign law. The Trustee Act also
provides for a settlor or protector to hold certain powers in respect
of the trust;
the Fraudulent Dispositions Act of 1991 (FD Act) which establishes
an additional legal framework specifically for asset protection trusts
(being ordinary or authorized purpose trusts); and
the Purpose Trusts Act of 2004 (PT Act) which concerns the estab-
lishment of “Authorised Purpose Trusts” (APTs) for non-charitable
purposes or individuals.
99. The trustee of an APT must be a licensed bank or trust company, or a
licensed FCSP (s7(1), PT Act), and any person administering such a trust where
the trustee is not so licensed, is guilty of an offence liable to a fine of up to
BSD 5 000 (s7(5), PT Act). Every APT will also have “authorized applicants”
who have certain rights including the same rights as beneficiaries of an ordi-
nary trust (s6, PT Act). Authorised applicants by definition include the settlor
(unless otherwise provided in the trust instrument), and any other person so
appointed by the trust instrument, or by a Court or the Attorney-General (in
certain circumstances). Except where a specific provision of the PT Act applies,
the law applicable to ordinary trusts will apply to APTs (s10, PT Act)
Trust ownership and identity information required to be provided to

government authorities
100. There is no general obligation for trusts to be registered in The
Bahamas, whether they are created or administered in The Bahamas, or where
the trustee is resident in The Bahamas. Moreover, section 94 of the Trustee
Act specifically exempts a resident trustee from any obligation to register the
trust deed, by virtue of an express provision in that Act that the Registration
of Records Act does not apply.
Trust ownership and identity information required to be held by the trust

101. In respect of ordinary trusts, aside from professional trustees (corpo-
rate trustees and non-corporate trustees that carry on a business of offering
trust services) which are subject to relevant ownership and identity obligations
concerning the trust, there are no statutory obligations imposed for any person
including non-professional trustees to maintain any particular identity or
ownership information relating to the trust including its settlors or beneficiar-
ies. Whilst all trustees are subject to the common law requirements to have
knowledge of all documents pertaining to the formation and management of
a trust, the extent of such requirements could not be ascertained during the
Phase 1 review. An in-depth assessment of the effectiveness of this common
law regime will be considered as part of the Phase 2 review of The Bahamas.
102. Trustees of an APT are required by section 7(2) of the PT Act to
maintain information in The Bahamas including:
a copy of the trust instrument, and all amending or supplemental
instruments, or instruments executed pursuant to those documents; and
a register for each trust administered, which includes the name of
the creator of the trust and the name and address of any authorized
applicants named in the trust instrument.
103. A trustee of an APT who fails to maintain such a register, or who
makes an untrue statement in an instrument, register or document, will be
guilty of an offence and liable upon conviction to a fine of up to BSD 5 000.
Trust ownership and identity information required to be held by

regulated trust companies
104. Corporate trustees are regulated by the Central Bank and subject to
relevant ownership and identity obligations concerning the trust, pursuant to
the BTCR Act, unless they are exempt as a Private Trust Company (see para-
graph 107). Non-corporate trustees that carry on the business of offering trust
services (i.e. for profit or reward) must obtain a license from and be regulated
by, the Securities Commission pursuant to the FCSP Act. Trustees that do not
carry on the business of offering trust services are not required to be licensed
and are not subject to regulatory laws or the AML regime.
Licensed Corporate Trustees

105. Corporate trustees, as a result of both the AML regime, and indi-
rectly through the application of the BTCR Act (s13), are required to meet
certain know your customer, and record-keeping requirements. The details
of these requirements are described in detail in the binding “Guidelines
for licensees on the Prevention of Money Laundering and Countering the

Financing of Terrorism”, which are issued by the Central Bank. In particular
in respect of trusts, the Central Bank’s Guidelines state:
[95] The Licensee should normally, in addition to obtaining iden-
tification evidence for the trustee(s) and any other person who
has signatory powers on the account:
(i) make appropriate enquiry as to the general nature and the
purpose of the legal structure and the source of funds;
(ii) obtain identification evidence for the settlor(s) and for such other
person(s) exercising effective control over the trust which includes
an individual who has the power (whether exercisable alone, jointly
with another person or with the consent of another person) to:
(a) dispose of, advance, lend, invest, pay or apply trust property;
(b) vary the trust;
(c) add or remove a person as a beneficiary or to or from a
class of beneficiaries;
(d) appoint or remove trustees;
(e) direct, withhold consent to or veto the exercise of a power
such as is mentioned in subparagraph (a), (b), (c) or (d).
(iii) in the case of a nominee relationship, obtain identification
evidence for the beneficial owner(s).
…
[100] Licensees are also required by the FTRA to verify the iden-
tity of any underlying beneficiary of a legal structure. It is rec-
ognized that it may not be possible to identify the beneficiaries
of trusts precisely at the outset. For example, some beneficiaries
may be unborn children and some may only become vested on the
occurrence of specific events. Where the beneficiary has a vested
interest in the legal structure, verification must be carried out by
the Licensee providing the facility
106. It is noted that banks and trust companies may rely on “eligible intro-
ducers” in respect of their KYC obligations, however they must still obtain
copies of all KYC documentation within 30 days of the eligible introducer’s
customer due diligence being complete.11
11. Except where the eligible introducer fulfils certain criteria, including that the respec-
tive bank or trust company provides company incorporation or registered agent/
Private Trust Companies

107. Under the BTCR Act, a PTC (which may be an IBC or a General
Company) may be established to provide trustee services to a defined class
of trusts, all of which trusts must be created by or at the direction of persons
linked by a blood or family relationship. Such a PTC will be prohibited
from soliciting trust business and is exempt from the licensing obligations
imposed on other corporate trustees. However, a PTC must have a Registered
Representative (which must be a licensed bank or trust company or a licensed
FCSP), and must be approved by the Governor of the Central Bank.
108. PTCs are covered by the Banks and Trust Companies (Private Trust
Companies) Regulations 2007 (PTC Regulations). Under those Regulations,
the Registered Representative must maintain in The Bahamas certain docu-
ments including the memorandum and articles of association of the PTC,
the trust instrument for each trust administered by the PTC (including any
sub-trusts or appointed trusts); and a list of all PTCs for which he acts as the
Registered Representative.
109. Whilst a PTC is not subject to the provisions of the FTR Act as they
are not a “financial institution” within the definition in s3 of that Act, they
are nonetheless required to meet some of the obligations it establishes. Under
regulation 13 of the PTC Regulations, the Registered Representative of a PTC
must verify the identity of the following persons, in accordance with the FTR
Regulations:
the settlor and any person providing the funds or assets the subject
of the trust;
the person(s) who created or at whose direction, the trust was created;
the protector of the trust; and
any person with a vested interest under the trust.
110. The Registered Representative must also report suspicious transac-
tions. The Governor may impose a fine up to BSD 5 000 on any Registered
Representative who unreasonably fails to comply with a provision of the PTC
Regulations (regulation 15). A person who with intent to deceive contravenes
a provision of the PTC Regulations, or makes a representation that they know
to be false or do not believe to be true, is liable on summary conviction to a
fine of up to BSD 25 000 (regulation 14).
office services to it, and is part of the bank or trust company’s financial group. In
those cases, the KYC information need not be provided to the bank or trust company
but must be available to it within 3 days upon request to the eligible introducer.
111. The mechanisms in The Bahamas described in this section ensure

the availability of information on trusts, whether The Bahamas or foreign law
trusts, where significant elements of the trust such as a resident professional
trustee, are connected with The Bahamas. Nevertheless, it is conceivable that
a trust could be created under the laws of The Bahamas which has no other
connection with The Bahamas. In that event there may be no information
about the trust available in The Bahamas.
Foundations (ToR A.1.5)

112. A foundation as a distinct legal entity may be established in The
Bahamas under the Foundations Act of 2004, provided that it is established by
foundation charter (or by will) and is registered and has a registration certifi-
cate issued by the Registrar of Foundations (s3 and s5, Foundation Act). The
founder may be a natural or legal person, or a nominee founder. The founda-
tion must hold a minimum asset value of BSD 10 000, and may be for private,
commercial or charitable purposes.
113. At the time of establishment, there shall be appointed to the founda-
tion either or both a foundation agent and secretary, pursuant to section 12
of the Foundation Act, who shall be “officers” of the foundation. Officers
assume the role of the Foundation Council, in the absence of such a council
(s11). The foundation agent (or the secretary where no foundation agent is
appointed) must be either a licensed trust company or a licensed FCSP (s12),
and as a result the regulatory and AML laws will apply. Further, the founda-
tion itself remains at all times subject to the regulatory oversight of the regu-
lator that licenses the foundation agent (or secretary).
Foundation ownership and identity information required to be held

by government authorities
114. Foundations are required to register with the Registrar of Foundations,
and must provide certain information in a statement signed by a foundation
officer, or an attorney, including (s21, Foundation Act):
name and address of the secretary and foundation agent (if appointed,
s12);
address of the foundation’s registered office, which must be in The
Bahamas and must be the address of the secretary or foundation
agent (s13); and
a list of the foundation’s first officers.
115. Any change to the registered office of the Foundation must be noti-
fied to the Registrar within 28 days, and any change to the other information
provided at the time of registration must be advised within 30 days. The

Registrar must retain the original of documents delivered to him for the dura-
tion of the foundation, and for ten years thereafter (s59).
116. Any foundation which fails to make good any default in its obliga-
tions to file any information with the Registrar, may be subject to an order
from the Court to do so, and to bear the costs of such an order (s61). There
is no other financial sanction for failure to provide such updated informa-
tion, however in the case of falsification of any document delivered to the
Registrar, a fine of BSD 10 000 or imprisonment or both may be imposed. In
addition, the Attorney General may seek a court order against a foundation
for failing to meet any obligation under the Act.
117. There is no obligation to advise the Registrar of the identity of the
founders, members of the foundation council, the officers of the foundations
(other than the officers at the time of registration) or the foundation’s benefi-
ciaries; and neither the foundation’s charter nor articles are required to be filed.
Foundation ownership and identity information held by the

Foundation and members of the Foundation Council
118. Every foundation must maintain a file at its registered office in The
Bahamas that must include:
copy of the foundation charter and articles (if any);
name and address of the founder, and his address for service in The
Bahamas; and
name and address of the foundation council, or other governing body
or supervisory person
119. There is no obligation for the foundation to specifically identify the
beneficiaries of the foundation, other than the obligation that the foundation
charter must include the designation of the beneficiary or the identification
of a body by which the beneficiary is to be ascertained, or a statement that
a foundation has been formed to benefit the public at large. In cases where
a foundation agent assumes the role of the foundation council, the relevant
AML and regulatory laws will apply.
120. In the case of falsification of any document required to be main-
tained, a fine of BSD 10 000 or imprisonment or both may be imposed and
the Attorney General may seek a court order against a foundation for failing
to meet any obligation under the Act.
Enforcement provisions to ensure availability of information

(ToR A.1.6)
121. The existence of appropriate penalties for non-compliance with key
obligations is an important tool for jurisdictions to effectively enforce the
obligations to retain identity and ownership information. Non-compliance
affects whether the information is available to The Bahamas to respond to a
request for information by its EOI partners in accordance with the interna-
tional standard.
122. In The Bahamas, in general where an obligation to retain relevant
information exists, it is supported by an appropriate enforcement provision to
address the risk of non-compliance. It is noted that in respect of certain sanc-
tions imposed on ELPs and foundations, the level of available penalties are
significantly lower than in respect of obligations on other persons. However,
both ELPs and foundations are required by law to engage a licensed Service
Provider who would be subject to other more robust enforcement provisions
under the AML regime.
123. The enforcement provisions which address the key information obli-
gations are set out below:
a General Company, IBC or registered foreign company that fails to
file a required document with the Registrar, or that fails to keep an up
to date register of shareholders is liable to a fine of up to BSD 10 000
or two years imprisonment.
a FCSP that contravenes the FCSP Act where no specific penalty is
provided, is liable to a fine of BSD 10 000, whilst a contravention of
the Act with intent to deceive is liable to a fine of up to BSD 100 000.
regulators may take administrative measures against Regulated
Licensees that fail to meet their obligations including the suspension
of the licence for up to 60 days.
an investment fund or fund administrator which fails to comply with
the Investment Fund Act, may have a fine imposed by the Securities
Commission of up to BSD 300 000, or the Commission may suspend
or revoke the fund or administrator’s license, or the Commission may
impose “any other sanctions or remedies as the justice of the case
may require”.
a failure to meet the customer verification obligations under the FTR
Act, creates a liability for a fine of up to BSD 20 000 for individuals,
and BSD 100 000 for a body corporate.
a failure to comply with AML obligations pursuant to any regulation
or instruction issued by a regulator, can result in a fine on summary
conviction of up to BSD 10 000, or on conviction on information,

BSD 50 000 which can rise up to BSD 100 000 for subsequent offences.
a failure of an exempted limited partnership to advise the Registrar
of changes to the information provided upon registration, incurs a
liability on each general partner of BSD 25 per day in default.
any person administering an authorised purpose trust who is not a
licensed FCSP or bank or trust company, is guilty of an offence and
liable to a fine of up to BSD 5 000.
a foundation that fails to notify the Registrar of any change to any
information provided upon registration is not subject to any direct
penalty but may be subject to an order from the Court to remedy the
deficiency and be ordered to pay the costs of such order.
124. The effectiveness of the enforcement provisions which are in place in
The Bahamas will be considered as part of its Phase 2 review.
Determination and factors underlying recommendations
Determination
The element is in place.
Factors underlying Recommendations
recommendations
It is unclear whether an exemption The Bahamas should ensure that any
for investment funds in the Security exemption in respect of investment
Commission’s Guidelines is funds is consistent with the AML
subordinate to the more general regulations to ensure that all such
requirement in AML regulations for funds are subject to appropriate
ownership and identity information. ownership and identity requirements.
Whether an exemption does exist is
particularly relevant for determining
ownership and identity information
requirements for self-administered
private funds.
A.2. Accounting records

Jurisdictions should ensure that reliable accounting records are kept for all
relevant entities and arrangements.
General requirements (ToR A.2.1), Underlying documentation

(ToR A.2.2) and 5-year retention standard (ToR A.2.3)
Accounting records to be kept in respect of companies

125. All companies registered under the Companies Act (General and for-
eign-incorporated companies) must table financial statements at every annual
general meeting of the company (s118, Companies Act). Public companies are
subject to additional accounting requirements including that its accounts be
audited annually, and the Registrar may request “at any time” that a public
company provide a copy of its annual financial statement. Companies carry-
ing on business in The Bahamas will also be subject to the obligations under
the Business Licence Act (paragraph 51). It is not clear that these obligations,
particularly in respect of private or foreign-incorporated companies registered
under the Companies Act, will satisfy the requirements of element A2 of the
Terms of Reference. In particular, there is no obligation to maintain underly-
ing documentation, and there is no express obligation to maintain accounting
records for a minimum of a 5 year period under the Companies Act.
126. An IBC is required to “keep such financial statements, accounts and
records as the directors consider necessary or desirable in order to reflect
the financial position of the company” (s67, IBC Act) and no time period is
specified for which any such records must be kept. IBCs are required to have
a registered agent in the Bahamas who is a licensed FCSP or bank or trust
company (s38, IBC Act), thus the regulatory and AML obligations will apply
to require that person to maintain transaction records in respect of the IBC
where a transaction is conducted through them.
127. For SACs, sections 24 and 25 of the SAC Act impose an obligation to
maintain:
in respect of each SA, records in accordance with generally accepted
accounting principles, showing details that include share capital,
assets and liabilities, income and expenses, and dividends. Financial
statements shall also be prepared annually in respect of each SA;
a record of each transaction entered into by the SAC; and
in respect of the SAC, a general account which records all assets and
liabilities.
128. In respect of each SA, the obligation to lay the financial statements
at a general meeting may be waived indefinitely (although the waiver is revo-
cable) by the owners of that SA. Each year an SAC must file a declaration
that it has complied with the Act. Any person who makes a statement that he
knows or has reasonable grounds to believe is false, deceptive or misleading
he is liable on summary conviction to a fine of BSD 50 000 or imprisonment
or both. There is no express obligation for an SAC to maintain underlying
documentation, and there is no express obligation to maintain accounting
records for a minimum of a 5 year period under the SAC Act.
Accounting records to be kept by Business Licensees

129. Section 9(2) of the BL Act requires that:
Every person who carries on a business shall keep accounts and
records of the activities of the business and shall, for a period of
not less than two years from the date of any transaction relating
to the business, maintain accounts and records in respect of the
transaction
130. In the case of persons carrying on a medium, large or very large
business, the accounts and records shall also be maintained for not less than
2 years.
Accounting records to be kept under regulatory laws

131. The specific obligations to keep accounting records under the
regulatory laws vary greatly according to the sector being regulated. In all
cases however, Regulated Licensees as well as bank and trust companies,
and DNFBPs will be subject to the obligations of the AML regime, which
requires them to maintain transaction records on each client for a minimum
period of 5 years, as they are “financial institutions” for the purposes of the
FTR Act.
132. The FCSP Act does not create any obligations to retain account-
ing records in respect of their clients. Persons licensed under the Securities
Industry Act, are subject to an obligation to maintain inter alia “records relat-
ing to the trading of securities either on a principal or agency basis includ-
ing, but not limited to, purchase and sale ledgers, order tickets and customer
account statements” (regulation 52, Securities Industry Regulations).
133. An investment fund (in whichever legal form) must, under section
23 of the IF Act, keep and maintain “proper books of accounts, records and
documents” such that explain its transactions and disclose at any point in time
the financial position of the fund; including a fair presentation in all material
respects of the financial position, results of operations, changes in owner’s
equity and cash flows of the fund. Except where exempted by the Securities
Commission, a licensed investment fund must also have its financial state-
ments audited annually by an approved auditor (s31, IF Act). There is no
express obligation to maintain underlying documentation, and there is no
time period specified for the retention of records.
Accounting records to be kept by AML Service Providers

134. Section 23 of the FTR Act requires AML Service Providers in respect
of every transaction conducted through them, to keep “such records as are
reasonably necessary to enable that transaction to be readily reconstructed”.
Under section 24, these records shall be maintained for not less than five
years and shall include the nature, amount, and currency of the transaction,
and the date and parties to the transaction. The legally binding instructions
issued by the AML regulators (notably the Central Bank’s Guidelines, the
Securities Commission’s Guidelines and the Compliance Commission’s Codes
of Practice) provide further detail on the application of these requirements.
135. For instance, the Central Bank’s Guidelines notes at paragraph 208
that in respect of transaction records, compliance with the FTR Act requires:
At a minimum therefore, the records relating to transactions which must
be kept must include the following information:
the nature of the transaction;
details of the transaction including the amount of the transaction, and
the currency in which it was denominated;
the date on which the transaction was conducted;
details of the parties to the transaction;
where applicable, the facility through which the transaction was
conducted, and any other facilities directly involved in the transac-
tion; and
the files and business correspondence and records connected to the
facility.
136. The AML regime in respect of accounting records is limited to
records relating to a “transaction”, which as defined in section 2 of the FTR
Act means “any deposit, withdrawal, exchange or transfer of funds… or any
payment made in satisfaction, in whole or in part, of any contractual or other
legal obligation”. These requirements will therefore not capture all of the rel-
evant accounting records including underlying documentation, such as con-
tracts. In addition, where an entity or arrangement is required to engage an
AML Service Provider,, there is no obligation that it conducts all transactions
through them. Given the reliance that many entities and arrangements,
particularly IBCs, authorised trust companies and foundations place on the
AML regime to ensure that relevant accounting records are maintained (in
the absence of satisfactory obligations imposed directly on those entities and
arrangements), these limitations are such that full accounting records may not
be available in certain cases in respect of these entities and arrangements.
Accounting records to be kept in respect of partnerships

137. Section 29 of the Partnership Act (which also applies to LLPs) provides
that “partners are bound to render true accounts and full information of all
things affecting the partnership to any partner or his legal representative”. This
obligation will also apply to an ELP under section 12 of the ELP Act, subject
to any express or implied term to the contrary in the partnership agreement.
General partnerships and LLPs are also subject to those accounting obligations
under the Business Licence Act (as described in paragraphs 51 and 129); whilst
ELPs are subject to those transaction record keeping obligations under the
AML laws (as described in paragraph 134). It is not clear that these obligations
will, in sum, satisfy the requirements of element A2 of the Terms of Reference.
Accounting records to be kept in respect of trusts

138. At common law, all trustees resident in the Bahamas are subject to
a fiduciary duty to the beneficiaries to keep proper records and accounts of
their trusteeship. There are no additional statutory requirements in respect
of an ordinary trust, and it is not clear that this duty would ensure that all
accounting records are kept in accordance with the requirements of element
A.2. of the Terms of Reference.
139. In respect of an APT, the trustee must be a licensed bank or trust com-
pany, or a licensed FCSP (s7(1), PT Act) and who will therefore be subject to
accounting record obligations established by the AML regime. In addition, section
7(2) of the PT Act creates an obligation on the trustee to keep in The Bahamas
“such documents as are sufficient to show the true financial position of each such
trust at the end of the trust’s financial year, together with details of all applications
of principal and income during that financial year”. A trustee of an APT who fails
to maintain such records or makes an untrue statement in such a record, will be
guilty of an offence and liable upon conviction to a fine of up to BSD 5 000.
Accounting records to be kept by foundations

140. Under section 42, the Foundations Act only requires that “such
financial statements, accounts and records” be kept as the financial council
“consider necessary or desirable in order to reflect the financial position of
the foundation”. These are to be kept at the registered office of the founda-
tion, or such other place as the officers think fit. An income and expenditure
account shall be prepared annually, however this obligation may be waived
by the foundation council Hor other supervisory person (s43, Foundation
Act). However, foundations are required to have either or both a foundation
agent and secretary who are licensed FCSPs or bank or trust companies (s12,
Foundation Act), and therefore the regulatory and AML obligations will apply
to require the maintenance of accounting records in respect of the foundation.
141. The Bahamas has requirements for legal entities and arrangements
to maintain certain forms of accounting records but the approach taken is
inconsistent and these requirements are not sufficient in terms of their com-
prehensiveness or the minimum retention period.
Determination
The element is not in place
recommendations
All relevant entities and arrangements The Bahamas should ensure that
including international business reliable accounting records, including
companies, registered private and underlying documentation, are
foreign-incorporated companies, required to be kept in respect of all
authorised purpose trusts and relevant entities and arrangements for
foundations are not subject to express a minimum five year period.
obligations to maintain reliable
accounting records for a minimum five
year period
A.3. Banking information

Banking information should be available for all account-holders.
Record-keeping requirements (ToR A.3.1)

142. Persons carrying on banking business from or within The Bahamas
must be licensed by the Central Bank and are subject to the general regula-
tory requirements imposed on Regulated Licensees and the specific require-
ments of the Banks and Trust Companies Act. In addition, a licensed bank
is a “Financial Institution” within the ambit of the FTR Act, and is therefore
subject to The Bahamas’ AML regime.
143. As part of these obligations, banks are subject to the Guidelines issued
by the Central Bank. These Guidelines are binding, with any “financial insti-
tution” (including a bank) that fails to comply with any “guidelines, codes of
practice or other instructions” issued by the Central Bank,12 liable upon sum-
mary conviction to a fine of up to BSD 10 000; or upon conviction on informa-
tion, to fines up to BSD 50 000 or for subsequent offences, to BSD 100 000.
144. As concerns the requirement that banking information is available for
all account-holders, the Central Bank’s “Guidelines for licensees on the preven-
tion of money laundering and countering the financing of terrorism” sets out the
binding obligations to keep transaction records, which expands on the obliga-
tions in sections 23-25 of the FTR Act. In particular, paragraphs 206-208 of the
Guidelines specify that the following transactional information must be retained:
the parties to a transaction;
the facility through which the transaction was conducted any other
facilities directly involved n the transaction;
the beneficial owner of the account/facility and any intermediaries
involved;
the volume of funds flowing through the account/facility;
the date, amount and currency of a transaction; and
the files and business correspondence and records connected to the
facility.
145. All such transaction records must be kept for a minimum five year
period from the date the transaction is completed.
146. Considered in conjunction with the client identity obligations
imposed on banks found in the Central Bank’s Guidelines at paragraphs 49
and 57 in particular (similar to the obligations on trust companies, described
in paragraph 104 of this report), The Bahamas requires that banking informa-
tion is required to be available for all account holders.
Determination
12. Or other “relevant agency”, which is defined to include the Compliance Commission,
the Securities Commission, the Registrar of Insurance and the Gaming Board”: regu-
lation 2, Financial Intelligence (Transactions Reporting) Regulations, 2001.
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION – 45
B. Access to Information
Overview
147. A variety of information may be needed in respect of the administra-

tion and enforcement of relevant tax laws and jurisdictions should have the
authority to access all such information. This includes information held by
banks and other financial institutions as well as information concerning the
ownership of companies or the identity of interest holders in other persons
or entities. This section of the report examines whether The Bahamas’ legal
and regulatory framework gives to its competent authority access powers
that cover all relevant persons and information, and whether the rights and
safeguards that are in place would be compatible with effective exchange of
information.
148. The Bahamas’ Minister of Finance (the Minister) or his duly author-
ised representative has a broad power to obtain relevant information from any
person within its jurisdiction who has relevant information in his possession,
custody or under his control. In the case of requests under The Bahamas-US
TIEA, the Minister only has power to access information held within The
Bahamas. The Minister’s access powers are predominantly exercised by the
issue of a notice requesting the production of information, where non-com-
pliance can be sanctioned with significant penalties. The notice will include
details of the request, which have been agreed with the EOI partner. With the
oversight of a Court, the Minister also has the power to search premises and
seize information where there is a reasonable doubt that relevant information
is endangered.
149. Any obligations to which a person would otherwise be subject in
respect of the information sought are overridden where provision of the
information to the Minister is in relation to an EOI request. Further, a person
providing such information has an absolute defence to any confidential-
ity obligation. The rights of a person in respect of the protection of legally
privileged information, as well as their rights to seek judicial review of a
decision of the Minister remain protected by domestic legislation. However,
46 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION
an obligation on the Minister to delay providing the information to an EOI

partner, with the exception of the US, exists where judicial redress is sought
and a recommendation is made for The Bahamas to address this issue. Both
of the elements in this Part are found to be in place.
B.1. Competent Authority’s ability to obtain and provide information
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information).
Ownership and identity information (ToR B.1.1) and Accounting

records (ToR B.1.2.)
150. The Minister’s powers to access information are found in The
Bahamas and the United States of America Tax Information Exchange
Agreement Act 2003 (US TIEA Act) and the International Tax Cooperation
Act 2010 (ITC Act). The ITC Act covers access to, and exchange of informa-
tion, in respect of requests pursuant to all agreements that provide for the
exchange of information with respect to tax matters that are entered into by
The Bahamas, other than its agreement with the US. Under these Acts, the
Minister has powers to access information by issuing notices for its produc-
tion, or in certain instances through the use of search and seizure warrants
under the compulsory processes set out below.
151. The powers of the Minister to obtain relevant information to respond
to an EOI request are consistent regardless from whom the information is
to be obtained, for example from a government authority, bank, company,
trustee or individual; or whether the information to be obtained is ownership,
bank or accounting information. There is also no variation of the powers
between instances where the information is required to be kept pursuant to a
positive legal obligation, or not.
Use of information gathering measures absent domestic tax interest

(ToR B.1.3)
152. The information gathering powers of the Minister are not subject to
The Bahamas’ requiring such information for its own tax purposes. The EOI
agreements are incorporated directly into the domestic law of The Bahamas
which contains the access powers (the US TIEA Act and the ITC Act).
Compulsory powers (ToR B.1.4)

153. In The Bahamas, the powers to access information relevant to an EOI
request reside with the Minister or his authorised representative. They consist
of a power to require the production of information by issuing a notice, or to
use a search and seizure warrant (search warrant) to access the information.
In addition, the legislation also makes provision for the Minister to obtain
relevant information by way of witness deposition or certified copy.
154. Once a request is received by The Bahamas which is in accordance
with the relevant TIEA, the Minister may issue a notice requiring a person to
produce specified relevant information. The notice must contain “details of
the request to which the notice relates”: section 5(3), ITC Act; and section 5(5)
(a), US TIEA Act. These details would not be released unless they are agreed
with each of The Bahamas EOI partners as part of a confidential memoran-
dum of understanding signed pursuant to the relevant TIEA. A person will
have 28 days from the date of service of the notice to produce the informa-
tion, although the Minister may extend this time.
155. Under s6 (ITC Act and US TIEA Act), the Minister may apply to a
judge for a search warrant, which will be granted where the judge is satisfied
there are reasonable grounds to suspect that an offence has been, is, or will be
committed that will endanger the delivery of the information to the Minister.
156. Once information has been received by the Minister pursuant to
either a notice or a search warrant, the Minister must not disclose the infor-
mation to any person for a period of twenty days, after which he may provide
copies of the information to the requesting jurisdiction (s7, ITC Act and US
TIEA Act).
157. Both the ITC Act (s8) and the US TIEA Act (s10) also establish
mechanisms to require persons to provide information in the form of witness
depositions, and authenticated or certified copy documents to the extent so
permitted under Bahamian laws and practices.
158. The ITC Act (s9) and the US TIEA Act (s12) establish offences where
a person
fails to deliver the information required pursuant to a notice;
wilfully obstructs the execution of a search warrant;
wilfully tampers with, or alters any information such that it is false
when received by the Minister; or
wilfully alters, destroys, damages or conceals any information
requested under a notice.
159. Such offences are liable on summary conviction for fines of up to

BSD 25 000 or imprisonment for a term not exceeding 12months.
160. The US TIEA Act can be distinguished from the ITC Act in two
regards. The information which may be sought by the Minister under the US
TIEA Act, must be information held in The Bahamas. Unlike under the ITC
Act, it is not sufficient that the information is within the control of a person
in The Bahamas if the information itself is outside of the jurisdiction. This
requirement is established by two provisions of the US TIEA Act: first, that a
valid request from the US must specify that the information sought is in The
Bahamas (s4(3)(j), although it is unclear how this provision in domestic legis-
lation would be binding on the US, and it is not replicated in the US-Bahamas
TIEA); and second, the notice requiring production issued under section 5(1),
requires the recipient referred to in section 4(3)(j) to deliver the information
to the Minister. Therefore this appears to create a narrower jurisdictional
limit than the requirement to obtain information held, or in the possession or
control of a person within The Bahamas, as established under Article 2 of the
OECD Model TIEA or Article 26 of the OECD Model Tax Convention. The
Bahamas has advised that no issue has arisen in this regard when applying
the US TIEA Act to access information to respond to an EOI request.
161. Secondly, the Minister must, for certain requests made under the
US-Bahamas TIEA, receive a certificate from a senior official designated
by the US Secretary of Treasury which states that the information sought is
foreseeably relevant or material to the determination of a federal tax liability
of a US taxpayer, or a criminal tax liability under US federal tax laws.
162. The effect of these provisions means that The Bahamas has the power
to obtain and provide relevant information under the possession or control
of persons within its territorial jurisdiction in response to EoI requests from
all its EoI partners. In the case of the US, The Bahamas would not have
the power to obtain and provide such information if it was held outside of
The Bahamas although The Bahamas has advised that to date this has not
impeded access to information sought when applying the US TIEA Act.
Secrecy provisions (ToR B.1.5)

163. In addition to common law obligations on fiduciaries, there are
also statutory obligations of confidentiality imposed under The Bahamas’
law, however, pursuant to the ITC Act and US TIEA Act (s5(6) and s5(9)
respectively), a person who provides information to the Minister pursuant to
a notice requiring him to do so, has an absolute defence to any claim brought
against him as a result of producing that information.
164. The limits on information which must be exchanged that are pro-
vided for in the OECD Model TIEA and Article 26 of the OECD Model Tax
Convention, apply in The Bahamas. That is, The Bahamas is not required to
exchange information which is subject to attorney-client privilege; would dis-
close any trade, business, industrial, commercial or professional secret; or would
be contrary to public policy. In addition to the public policy exception, both
Acts create a specific exception for matters that would be contrary to national
security.
Determination
The element is in place
recommendations
In the case of the US TIEA Act, The The Bahamas should ensure that it
Bahamas does not have the power has the power to access information
to obtain and provide information sought under its TIEA with the US
held outside of The Bahamas, even if which is controlled by persons in
such information is in the control of a The Bahamas, even if it is located
person within its territorial jurisdiction. extra-territorially.
B.2. Notification requirements and rights and safeguards
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information.
Not unduly prevent or delay exchange of information (ToR B.2.1)

165. There is no requirement in The Bahamas’ domestic legislation that
the taxpayer under investigation or examination must be notified of a request.
Once the Minister receives information pursuant to a notice or search war-
rant, he must retain that information for 20 days prior to providing a copy of
it to the requesting jurisdiction. Notably in addition, under section 7(c) of the
ITC Act, this 20 day period “shall” be extended by the Minister:
in the event a taxpayer or interested person has objected to the
Minister providing the assistance requested and has sought
judicial review of an act of the Minister or other lawful recourse
against an act of the Minister pursuant to the provisions of sec-
tion 10.
166. The ITC Act is not clear how long the retention of the documents
must be extended, however it may be until the objection is resolved. It is
noted that the US TIEA Act only provides that the Minister “may” extend the
period, under section 7(2). Thus, whilst such an extension could equally affect
the exchange, the Minister is not bound to extend the period thereby delay-
ing the exchange of the information. Therefore, section 7(c) of the ITC Act
may impact the legal framework for effective access to information. There
is however no notification requirement under The Bahamas’ legislation, and
further, The Bahamas has advised that to date there have been no legal chal-
lenges to the Minister’s powers under the ITC Act or the US TIEA Act, or
to an exchange of information pursuant to an EOI agreement. Whether this
obligation on the Minister to retain information is compatible with effective
access in practice will be considered in the Phase 2 review of The Bahamas.
167. In respect of rights and safeguards of persons, the OECD Model
TIEA provides that they remain applicable “to the extent that they do not
unduly prevent or delay effective exchange of information”. In contrast, a
number of The Bahamas’ agreements13 provide that a requested party “shall
use its best endeavours” to ensure that they do not so unduly prevent of delay
effective EOI. It is unlikely that this variation will materially affect access to
information in line with the international standards.
Determination
recommendations
In the case of information exchange The Bahamas should ensure that
with all EOI partners except the US, its domestic law provisions are
the competent authority is required compatible with the timely access and
to retain information provided to him exchange of information with all of its
where a taxpayer or interested person EOI partners.
has sought judicial review or other
legal recourse. Under the domestic
law concerning information exchange
with the US, the Minister has discre-
tion whether to withhold the exchange
of information which he has accessed.
13. With Australia, Belgium, Monaco, New Zealand, San Marino and the UK.
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION – 51
C. Exchanging Information
Overview
168. Jurisdictions generally cannot exchange information for tax purposes

unless they have a legal basis or mechanism for doing so. In The Bahamas,
the legal authority to exchange information derives from tax information
exchange agreements (TIEAs), once these become part of The Bahamas’
domestic law. This section of the report examines whether The Bahamas has
a network of information exchange agreements that would allow it to achieve
effective exchange of information in practice.
169. The Bahamas has been very active in negotiating TIEAs, concluding
21 agreements since September 2009. A list of these signed agreements can
be found in Annex 2, and cover a significant number of relevant partners.
All the TIEAs which have been signed by The Bahamas generally follow the
terms of the OECD Model TIEA, with the exception of its agreement with
the US. Its TIEAs are incorporated into domestic law by: (i) The Bahamas
and the United States of America Tax Information Exchange Agreement Act
of 2003 (US TIEA Act), and (ii) the International Tax Cooperation Act, 2010
(ITC Act). The Minister of Finance has the power to incorporate TIEAs into
The Bahamas’ domestic law by order amending the ITC Act Schedule, pursu-
ant to section 13(2) of the ITC Act.
170. The confidentiality of information exchanged with The Bahamas is
protected by obligations imposed under the TIEAs, as well as in its domestic
legislation (oath of secrecy required by all public officials, and personal data
protection legislation), and is supported by sanctions for non-compliance.
However, the competent authority is required to provide details of the EOI
request when issuing a notice and it is unclear what would happen in the event
that The Bahamas could not reach an understanding with its EOI partner on
these details and this will be considered in its Phase 2 review. The restric-
tions on the exchange of certain types of information is in accordance with
the international standards, such as business or professional secrets, informa-
tion the subject of attorney-client privilege, or where the disclosure of the
52 – COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
information requested would be contrary to public policy. These exceptions

are reflected in The Bahamas’ domestic law as well as in its EOI agreements.
In respect of confidentiality the report finds that the element is in place, but
certain aspects of its legal implementation need improvement. The other ele-
ments in this Part are found to be in place.
C.1. Exchange-of-information mechanisms
Exchange of information mechanisms should allow for effective exchange of information.
Foreseeably relevant standard (ToR C.1.1)

171. The international standard for exchange of information envisages
information exchange to the widest possible extent. Nevertheless it does not
allow “fishing expeditions”, i.e. speculative requests for information that have
no apparent nexus to an open inquiry or investigation. The balance between
these two competing considerations is captured in the standard of “foresee-
able relevance” which is included in Article 1 of the OECD Model TIEA, set
out below:
The competent authorities of the Contracting Parties shall
provide assistance through exchange of information that is
foreseeably relevant to the administration and enforcement of
the domestic laws of the Contracting Parties concerning taxes
covered by this Agreement. Such information shall include infor-
mation that is foreseeably relevant to the determination, assess-
ment and collection of such taxes, the recovery and enforcement
of tax claims, or the investigation or prosecution of tax matters.
Information shall be exchanged in accordance with the provi-
sions of this Agreement and shall be treated as confidential in the
manner provided in Article 8. The rights and safeguards secured
to persons by the laws or administrative practice of the requested
Party remain applicable to the extent that they do not unduly
prevent or delay effective exchange of information.
172. Under section 4(3) of both the US TIEA Act and the ITC Act, the
requesting party must specify:
… the reasons for believing that the information requested is
foreseeably relevant to tax administration and enforcement
with respect to the person identified in paragraph (c) of this
subsection.
173. Ten of the 22 TIEAs signed by The Bahamas14 contain a similar

provision under Article 5(5). This provision creates a requirement for estab-
lishing a valid request which is in addition to those set out in Article 5(5) of
the OECD Model TIEA. However the variation appears to be in line with the
purpose of the requirements in Article 5(5) of the OECD Model TIEA, which
is to demonstrate the foreseeable relevance of the information sought.
174. It is noted that in the case of the China-Bahamas TIEA, a requested
party is under no obligation to provide information which relates to a period
more than 6 years prior to the tax period under consideration.
175. In all other regards, The Bahamas’ TIEAs meet the “foreseeably rel-
evant” standard as described in Article 1 of the OECD Model TIEA, and its
accompanying commentary.
In respect of all persons (ToR C.1.2)

176. For exchange of information to be effective it is necessary that a
jurisdiction’s obligations to provide information are not restricted by the
residence or nationality of the person to whom the information relates or by
the residence or nationality of the person in possession or control of the infor-
mation requested. For this reason the international standard for exchange of
information envisages that exchange of information mechanisms will provide
for exchange of information in respect of all persons.
177. In all instances, the TIEAs signed by The Bahamas contain a provi-
sion concerning jurisdictional scope which is equivalent to Article 2 of the
OECD Model TIEA.
Obligation to exchange all types of information (ToR C.1.3)

178. Jurisdictions cannot engage in effective exchange of information if
they cannot exchange information held by financial institutions, nominees or
persons acting in an agency or a fiduciary capacity. Both the OECD Model
Tax Convention and the OECD Model TIEA, which are primary authoritative
sources of the standards, stipulate that bank secrecy cannot form the basis for
declining a request to provide information and that a request for information
cannot be declined solely because the information is held by nominees or
persons acting in an agency or fiduciary capacity or because the information
relates to an ownership interest.
179. None of the TIEAs concluded by The Bahamas allow the requested
jurisdiction to decline to supply information solely because it is held by a
14. With Argentina, Belgium, Germany, Mexico, Monaco, New Zealand, San Marino,
Spain, the UK and the USA.
financial institution, nominee or person acting in an agency or a fiduciary

capacity, or because it relates to ownership interests in a person.
Absence of domestic tax interest (ToR C.1.4)

180. The concept of “domestic tax interest” describes a situation where a
contracting party can only provide information to another contracting party
if it has an interest in the requested information for its own tax purposes. A
refusal to provide information based on a domestic tax interest requirement
is not consistent with the international standard. EOI partners must be able
to use their information gathering measures even though invoked solely to
obtain and provide information to the requesting jurisdiction.
181. All of the TIEAs concluded by The Bahamas allow information to be
exchanged notwithstanding it is not required for any Bahamas domestic tax
purpose. Moreover, it is noted that The Bahamas does not impose any taxes
on income.
Absence of dual criminality principles (ToR C.1.5)

182. The principle of dual criminality provides that assistance can only be
provided if the conduct being investigated (and giving rise to the information
request) would constitute a crime under the laws of the requested country if
it had occurred in the requested country. In order to be effective, exchange of
information should not be constrained by the application of the dual criminal-
ity principle.
183. None of the TIEAs concluded by The Bahamas applies the dual crimi-
nality principle to restrict the exchange of information.
Exchange of information in both civil and criminal tax matters

(ToR C.1.6)
184. Information exchange may be requested both for tax administration
purposes and for tax prosecution purposes. The international standard is not
limited to information exchange in criminal tax matters but extends to infor-
mation requested for tax administration purposes (also referred to as “civil
tax matters”).
185. All of the EOI agreements concluded by The Bahamas provide for the
exchange of information in both civil and criminal tax matters.
Provide information in specific form requested (ToR C.1.7)

186. In some cases, a Contracting State may need to receive information
in a particular form to satisfy its evidentiary or other legal requirements.
Such forms may include depositions of witnesses and authenticated copies
of original records. Contracting States should endeavour as far as possible to
accommodate such requests. The requested State may decline to provide the
information in the specific form requested if, for instance, the requested form
is not known or permitted under its law or administrative practice. A refusal
to provide the information in the form requested does not affect the obligation
to provide the information.
187. All of the TIEAs concluded by The Bahamas allow for information
to be provided in the specific form requested, to the extent allowable under
the requested jurisdiction’s domestic laws. Domestic law accommodates this
requirement by requiring information to be produced, where requested, in a
specific form, notably witness depositions, and authenticated copies: section
7, ITC Act; and section 10, US TIEA Act.
In force (ToR C.1.8)

188. Exchange of information cannot take place unless a jurisdiction has
EOI arrangements in force. Where EOI arrangements have been signed, the
international standard requires that jurisdictions must take all steps necessary
to bring them into force expeditiously.
189. In the case of The Bahamas, this requires the agreement to be incor-
porated into domestic law by the making of an Order by the Minister to
amend the Schedule to the ITC Act to include reference to the TIEA: section
13(2) of the ITC Act.
190. Even where, The Bahamas has taken all steps required by it, the
TIEA will not enter into force until such time as its EOI partner has also
concluded such steps, and the two partners have provided written notification
of this fact. Following written notification, a short grace period is normally
provided for in the agreement, such that the agreement enters into force a
number of days (often 30 days) thereafter.
191. The Bahamas has signed 22 TIEAs in total. The US-Bahamas TIEA
has been in force since 2002, and a further six TIEAs had recently entered
into force as at November 2010: with China, Denmark, the Faroe Islands,
Finland, France, and Norway. With the exception of the Canada-Bahamas
TIEA (which was signed on 17 June 2010), The Bahamas has completed all
steps which for its part, that are necessary to bring the remaining 14 signed
TIEAs into force. The status of the TIEAs which The Bahamas has signed is
set out in Annex 2.
In effect (ToR C.1.9)

192. For information exchange to be effective the parties to an exchange of
information arrangements need to enact any legislation necessary to comply
with the terms of the arrangement. The Bahamas has enacted domestic leg-
islation, principally the US TIEA Act and the ITC Act, to give effect to its
arrangements for the exchange of information for tax purposes. A few poten-
tial issues with this domestic legislation which may inhibit the agreements
from being given their full intent are identified in Part B (see paragraphs 160,
161 and 166) of this Report.
Determination
C.2. Exchange-of-information mechanisms with all relevant partners

The jurisdictions’ network of information exchange mechanisms should cover
all relevant partners.
193. Ultimately, the international standard requires that jurisdictions

exchange information with all relevant partners, meaning those partners who
are interested in entering into an information exchange arrangement. Agree-
ments cannot be concluded only with counter-parties without economic sig-
nificance. If it appears that a jurisdiction is refusing to enter into agreements or
negotiations with partners, in particular ones that have a reasonable expectation
of requiring information from that jurisdiction in order to properly administer
and enforce its tax laws it may indicate a lack of commitment to implement the
standards.
194. As at November 2010, The Bahamas had signed agreements with 22
jurisdictions, of which 16 are OECD members, although only seven agree-
ments are currently in force. For its part, The Bahamas has taken all steps
necessary to bring the remaining 15 agreements into force, with the exception
of its agreement with Canada. The Bahamas’ major trading partners are the
United States and Canada, which together make up more than 85% of foreign
trade and it has signed EOI agreements with both of these jurisdictions. In
addition, The Bahamas Government’s declared policy is to negotiate EOI
agreements with any jurisdiction that requests such an agreement and of the
24 agreements signed to date, 22 are with G20 or OECD countries.
195. Comments were sought from the jurisdictions participating in
the Global Forum in the course of the preparation of this report, and no
jurisdiction advised the assessment team that The Bahamas had refused to
negotiate or conclude a TIEA with it.
196. The Bahamas has indicated that it has approached a number of
other jurisdictions and indicated its willingness to negotiate a TIEA which
would meet the international standards however some of the jurisdictions
approached had declined to negotiate or indicated that they would only nego-
tiate DTAs, or had not responded to The Bahamas’ invitation.
Determination
The element is in place
recommendations
The Bahamas should continue to
develop its EOI network with all
relevant partners.
C.3. Confidentiality
The jurisdictions’ mechanisms for exchange of information should have adequate
provisions to ensure the confidentiality of information received.
Information received: disclosure, use, and safeguards (ToR C.3.1)

and All other information exchanged (ToR C.3.2)
197. Governments would not engage in information exchange without the
assurance that the information provided would only be used for the purposes
permitted under the exchange mechanism and that its confidentiality would
be preserved. Information exchange instruments must therefore contain con-
fidentiality provisions that spell out specifically to whom the information can
be disclosed and the purposes for which the information can be used. In addi-
tion to the protections afforded by the confidentiality provisions of informa-
tion exchange instruments, jurisdictions with tax systems generally impose
strict confidentiality requirements on information collected for tax purposes.
Confidentiality rules should apply to all types of information exchanged,
including information provided in a request, information transmitted in
response to a request and any background documents to such requests.
198. The TIEAs concluded by The Bahamas generally meet the stand-
ards for confidentiality including the limitations on disclosure of informa-
tion received and use of the information exchanged, which are reflected
in Article 8 of the OECD Model TIEA. In some cases15 the confidentiality

article also provides that where information is provided for a criminal tax
purpose is subsequently to be used for a non-criminal tax purpose, and vice
versa, than the requested jurisdiction “shall be notified of this change in use,
if not before, then within a reasonable time of the change in use occurring”.
These confidentiality obligations form part of Bahamas’ domestic law by the
incorporation of its TIEAs by the US TIEA Act and the ITC Act, rather than
by a separate specific provision.
199. Under Bahamas’ domestic law, competent authorities exchanging
information are bound by the Official Secrets Act, pursuant to which all
public servants are required to take an oath of secrecy upon employment.
The Act makes it an offence for public officers to communicate, retain or fail
to take reasonable care of information received by them during their service,
either during that service or afterwards. In addition, the Data Protection
(Privacy of Personal Information) Act, 2003 imposes the privacy principles
endorsed by the OECD and the UN with respect to the collection, use, han-
dling and disclosure of personal information. A person guilty of an offence
under the Official Secrets Act shall be liable, to imprisonment with or without
hard labour for a maximum term of two years or a fine of BSD 500 or to both.
A person guilty of an offence under the Data Protection Act shall be liable to,
upon a summary conviction, a fine of up to BSD 2 000, and in the case of a
conviction on information, a fine of up to BSD 100 000.
200. The Bahamas are required to include certain details when issuing
a notice to obtain information, under section 5(3), ITC Act and section 5(5)
US TIEA Act (see section B.1. of this report). Whilst it is acknowledged that
for EOI requests in all contexts some details of the request must be disclosed
to the holder of information in order to execute a request, it is not known
how broad the details are which The Bahamas’ domestic law requires to
be released to the holder of information. It is also acknowledged that The
Bahamas’ competent authority, in all cases, seeks to come to an understand-
ing with its counterparts on which details of a request may be released when
issuing a notice to access information (which understanding does not need to
be a signed agreement). As noted in paragraph 154, The Bahamas has advised
that no details would be released by them until there is an understanding
reached about these details with its EOI partner. It is unclear what would
happen in the event that The Bahamas could not reach an understanding with
its EOI partner. Whether this affects the exchange of information in practice
will be considered as part of the Phase 2 review of The Bahamas.
15. The Bahamas’ agreements with Argentina, Belgium, Mexico, Monaco, New
Zealand, San Marino, the United Kingdom and the US.
Determination
C.4. Rights and safeguards of taxpayers and third parties

The exchange of information mechanisms should respect the rights and
safeguards of taxpayers and third parties.
Exceptions to requirement to provide information (ToR C.4.1)

201. The international standard allows requested parties not to supply
information in response to a request in certain identified situations. Among
other reasons, an information request can be declined where the requested
information would disclose confidential communications protected by the
attorney-client privilege. Attorney-client privilege is a feature of the legal
systems of many countries.
202. However, communications between a client and an attorney or other
admitted legal representative are, generally, only privileged to the extent
that, the attorney or other legal representative acts in his or her capacity as
an attorney or other legal representative. Where attorney – client privilege is
more broadly defined it does not provide valid grounds on which to decline
a request for exchange of information. To the extent, therefore, that an attor-
ney acts as a nominee shareholder, a trustee, a settlor, a company director
or under a power of attorney to represent a company in its business affairs,
exchange of information resulting from and relating to any such activity
cannot be declined because of the attorney-client privilege rule.
203. The limits on information which must be exchanged under The
Bahamas’ TIEAs mirror those provided for in the OECD Model TIEA and
Article 26 of the OECD Model Tax Convention. That is, information which
is subject to legal privilege; which would disclose any trade, business, indus-
trial, commercial or professional secret or trade process; or would be contrary
to public policy, is not required to be exchanged. This is incorporated into
The Bahamas’ domestic law by virtue of section 3(3) and section 3(4) of the
US TIEA Act and section 3(3) of the ITC Act.
Determination
C.5. Timeliness of responses to requests for information

The jurisdiction should provide information under its network of agreements
in a timely manner.
Responses within 90 days (ToR C.5.1.)

204. In order for exchange of information to be effective it needs to be pro-
vided in a time frame which allows tax authorities to apply the information to
the relevant cases. If a response is provided but only after a significant lapse of
time the information may no longer be of use to the requesting authorities. This
is particularly important in the context of international cooperation as cases in
this area must be of sufficient importance to warrant making a request.
205. Rather than a specific time frame, a number of The Bahamas’
TIEAs16 vary from Article 5(6) of the OECD Model TIEA as they do not
specify the time frame for acknowledging or responding to an EOI request.
Rather, they provide that the requested party shall use its “best endeavours”
to provide the information “within a reasonable time”. In addition, neither
its TIEA with Australia nor with the US contains provisions concerning the
time within which a status update, or response to an EOI request is to be
provided. The Bahamas has advised that where a specific timeframe does
not appear in its TIEAs, the timeframes are instead included in the confi-
dential Memorandums of Understanding which are concluded pursuant to
the TIEA. As such there appear to be no legal restrictions on the ability of
The Bahamas’ competent authority to respond to requests within 90 days of
receipt by providing the information requested or by providing an update on
the status of the request.
Organisational process and resources (ToR C.5.2)

206. A review of the practical ability of Bahamas’ tax authorities to
respond to requests in a timely manner will be conducted in the course of its
Phase 2 review. This Phase 1 assessment is intended to review whether there
are aspects of Bahamas’ domestic law or regulatory framework that appear
to prevent the delivery of information in a timely manner.
Absence of restrictive conditions on exchange of information

(ToR C.5.3)
207. Exchange of information assistance should not be subject to unrea-
sonable, disproportionate, or unduly restrictive conditions.
16. With Argentina, Belgium, Canada, Germany, Mexico, Monaco, the Netherlands,
New Zealand, San Marino and the UK.
208. There are no laws or regulations in The Bahamas that impose restric-
tive conditions on exchange of information that would be incompatible with
the international standard.
Determination
The assessment team is not in a position to evaluate whether this
element is in place, as it involves issues of practice that are dealt with in
the Phase 2 review.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 63
Summary of Determinations and Factors

Underlying Recommendations
Determination Factors underlying Recommendations

recommendations
Jurisdictions should ensure that ownership and identity information for all relevant entities
and arrangements is available to their competent authorities. (ToR A.1.)
The element is in It is unclear whether an The Bahamas should ensure
place. exemption for investment that any exemption in
funds in the Security respect of investment funds
Commission’s Guidelines is consistent with the AML
is subordinate to the more regulations to ensure that
general requirement in AML all such funds are subject to
regulations for ownership appropriate ownership and
and identity information. identity requirements.
Whether an exemption does
exist is particularly relevant
for determining ownership
and identity information
requirements for self-
administered private funds.
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities
and arrangements. (ToR A.2.)
The element is not in All relevant entities and The Bahamas should ensure
place. arrangements including that reliable accounting
international business records, including underlying
companies, registered private documentation, are required
and foreign-incorporated to be kept in respect of
companies, authorised all relevant entities and
purpose trusts and foundations arrangements for a minimum
are not subject to express five year period.
obligations to maintain reliable
accounting records for a
minimum five year period.
64 – SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

recommendations
Banking information should be available for all account-holders. (ToR A.3.)
The element is in
place.
Competent authorities should have the power to obtain and provide information that is the
subject of a request under an exchange of information arrangement from any person within
their territorial jurisdiction who is in possession or control of such information (irrespective
of any legal obligation on such person to maintain the secrecy of the information). (Tor B.1.)
The element is in In the case of the US TIEA The Bahamas should ensure
place. Act, The Bahamas does not that it has the power to access
have the power to obtain information sought under its
and provide information held TIEA with the US which is
outside of The Bahamas, even controlled by persons in The
if such information is in the Bahamas, even if it is located
control of a person within its extra-territorially.
territorial jurisdiction.
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the
requested jurisdiction should be compatible with effective exchange of information. (ToR B.2.)
The element is in In the case of information The Bahamas should ensure
place. exchange with all EOI partners that its domestic law provisions
except the US, the competent are compatible with the timely
authority is required to access and exchange of
retain information provided information with all of its EOI
to him where a taxpayer or partners.
interested person has sought
judicial review or other legal
recourse. Under the domestic
law concerning information
exchange with the US,
the Minister has discretion
whether to withhold the
exchange of information which
he has accessed.
Exchange of information mechanisms should allow for effective exchange of information.
(ToR C.1.)
The element is in
place.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS – 65

recommendations
The jurisdictions’ network of information exchange mechanisms should cover all relevant
partners. (ToR C.2.)
The element is in The Bahamas should continue
place. to develop its EOI network with
all relevant partners.
The jurisdictions’ mechanisms for exchange of information should have adequate provisions
to ensure the confidentiality of information received. (ToR C.3.)
The element is in
place.
The exchange of information mechanisms should respect the rights and safeguards of
taxpayers and third parties. (ToR C.4.)
The element is in
place.
The jurisdiction should provide information under its network of agreements in a timely
manner. (ToR C.5.)
The assessment team
is not in a position to
evaluate whether this
element is in place, as
it involves issues of
practice that are dealt
with in the Phase 2
review.
ANNEXES – 67
Annex 1: Jurisdiction’s Response to the Review Report*
1. The Bahamas would like to thank the assessment team and the peer
review group members for the productive and constructive engage-
ment during the course of the review and the useful observations
made. The Bahamas acknowledges the findings of the report and
notes its continuing commitment to the review process.
The Bahamas wishes to record the following comments with regard to

the findings of the report:
2. The Bahamas wishes to clarify that its legislation has been purpose
built over a period of time as necessary, for reasons that have not
included direct taxation. In this regard The Bahamas wishes to
express particular appreciation to the assessors for the time and effort
taken to review the various pieces of legislation as an entire body.
3. Whilst the assessment has determined that the element is not in place
for accounting records due to the absence of express provisions in the
law regarding each enumerated aspect of element A.2, The Bahamas
wishes to re-emphasise that the general requirements of element A.2
have partially been met by the existence of various positive obliga-
tions to maintain accounting records. This has been recognised
throughout the report in respect of several entities. Nevertheless, The
Bahamas intends to introduce relevant adjustments to the legislative
framework to ensure that the requirements of element A.2 are met
in full.
4. The Bahamas wishes to advise that since the date of the report a new
Business Licence Act which came into force on 1st January 2011,
now requires retention of accounting records to the standard of 5
years.
* This Annex presents the Jurisdiction’s response to the review report and shall
not be deemed to represent the Global Forum’s views.
68 – ANNEXES
In relation to exchange of information mechanisms, The Bahamas

wishes to bring the following update:
5. The Bahamas completed its internal procedures on 17th December
2010 for bringing its TIEA with Canada into force.
6. Since November 2010 The Bahamas has signed two new TIEAs with
Japan (on 27 January 2011) and India (on 11th February 2011), bring-
ing its total number of TIEAs signed to date to 24. The Bahamas
continues to await notification from three jurisdictions following the
completion of negotiations, for a date to sign the respective TIEAs.
7. Additionally since the date of the report, TIEAs with the following
seven (7) jurisdictions have come into force due to the completion of
the necessary internal procedures by the respective treaty partners of
The Bahamas: the Netherlands (1st December 2010), Sweden (24th
December 2010), Mexico (30th December 2010), United Kingdom
(7th January 2011), Australia (11th January 2011), Monaco (18th
February 2011) and India (1st March 2011). The number of TIEAs
fully in force for The Bahamas is now 14.
8. Finally, since November 2010:
negotiations with one other jurisdiction have been completed;
new negotiations with two other jurisdictions have commenced; and
negotiations with twelve other jurisdictions are in various stages of
completion.
ANNEXES – 69
Annex 2: List of All Exchange-of-Information Mechanisms

in Force
Jurisdiction Type of EoI Date Signed Date Entered Into

Arrangement Force
1 United States TIEA 25 January 2002 31 December 2003
2 Monaco TIEA 18 September 2009
3 San Marino TIEA 24 September 2009
4 United Kingdom TIEA 29 October 2009
5 New Zealand TIEA 18 November 2009
6 China TIEA 1 December 2009 28 August 2010
7 Argentina TIEA 3 December 2009
8 Netherlands TIEA 3 December 2009 (1 December)
9 Belgium TIEA 7 December 2009
10 France TIEA 7 December 2009 13 September 2010
11 Mexico TIEA 23 February 2010 (30 December 2010)
12 Denmark TIEA 10 March 2010 9 September 2010
13 The Faroe Islands TIEA 10 March 2010 24 October 2010
14 Finland TIEA 10 March 2010 9 September 2010
15 Greenland TIEA 10 March 2010
16 Iceland TIEA 10 March 2010
17 Norway TIEA 10 March 2010 9 September 2010
18 Sweden TIEA 10 March 2010 (24 December 2010)
19 Spain TIEA 11 March 2010
20 Australia TIEA 30 March 2010
21 Germany TIEA 9 April 2010
22 Canada TIEA 17 June 2010
70 – ANNEXES
Annex 3: List of all Laws, Regulations

and Other Material Received
Anti Money Laundering (AML) Law and Regulations

Financial Intelligence Unit Act (FIU Act)
Financial Transaction Reporting Act (FTR Act)
Financial Transaction Reporting Regulations (FTR Regulations)
Financial Intelligence (Transaction Reporting) Regulations FI(TR)R
Proceeds of Crime Act
Guidelines for Licensees on the Prevention of Money Laundering and
Countering the Financing of Terrorism (Central Bank’s Guidelines)
Guidelines for Licensees/Registrants on the prevention of Money Laundering
and Countering the Financing of Terrorism (Securities Commissions’ Guidelines)
Commercial and Financial Services Laws and Regulations

Banks and Trust Companies Regulation Act (BTCR Act)
Banks and Trust Companies (Private Trust Companies) Regulations
(PTC Regulations)
Business Licence Act (BL Act)
Companies Act
Exchange Control Regulations Act
Exempted Limited Partnerships Act ( ELP Act)
Exempted Limited Partnerships Regulations
External Insurance Act (EI Act)
Financial and Corporate Service Provider Act (FCSP Act)
ANNEXES – 71
Foundations Act
Fraudulent Dispositions Act (FD Act)
Insurance Act
International Business Companies Act (IBC Act)
Investment Funds Act (IF Act)
Investment Funds Regulations (IF Regulations)
Partnership Act
Partnership Limited Liability Act (PLL Act)
Purpose Trust Act (PT Act)
Segregated Accounts Companies Act (SAC Act)
Securities Industry Act
Securities Industry Regulations (SI Regulations)
Trustee Act
Exchange of Information Laws and Regulations

International Tax Cooperation Act (ITC Act)
International Tax Cooperation Regulations
The Bahamas and the United States of America Tax Information Exchange
Agreement Act (US TIEA Act)
The Bahamas and the United States of America Tax Information Exchange
Agreement Regulations
General laws and regulations

The Constitution of The Bahamas
Data Protection (Privacy of Personal Information) Act
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(23 2011 17 1 P) ISBN 978-92-64-10828-8 – No. 58101 2011
Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: THE BAHAMAS
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange
of information is carried out by over 100 jurisdictions which participate in the work of the
Global Forum on an equal footing.
Peer Review Report
The Global Forum is charged with in-depth monitoring and peer review of the
implementation of the standards of transparency and exchange of information for tax
Phase 1
purposes. These standards are primarily reflected in the 2002 OECD Model Agreement
on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the
Legal and Regulatory Framework
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The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
THE BAHAMAS
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information
Peer Review Report Phase 1 Legal and Regulatory Framework THE BAHAMAS
must be provided, including bank information and information held by fiduciaries,
regardless of the existence of a domestic tax interest or the application of a dual
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Peer Reviews: The Bahamas 2011: Phase 1: Legal and Regulatory Framework, Global Forum on
Transparency and Exchange of Information for Tax Purposes: Peer Reviews, OECD Publishing.
http://dx.doi.org/10.1787/9789264108295-en
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ISBN 978-92-64-10828-8 (print)

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Summary of Determinations and Factors Underlying Recommendations. . . . 63

Annex 1: Jurisdiction’s Response to the Review Report . . . . . . . . . . . . . . . . . . 67

About the Global Forum

The Global Forum on Transparency and Exchange of Information for Tax

5. Whilst The Bahamas’ commitment to the international standard is

6. The assessment of the legal and regulatory framework of The

Overview of The Bahamas

10. The Bahamas is an archipelago extending across the western

Overview of The Bahamas’ commercial laws and financial sector

Overview of The Bahamas’ framework for the exchange of

Compliance with the Standards

25. Effective exchange of information requires the availability of reliable

27. The requirements under The Bahamas’ law in respect of accounting

A.1. Ownership and identity information

Companies (ToR 3 A.1.1)

International Business Company

Segregated Account Company

Company ownership and identity information required to be provided

Company ownership and identity information required to be held by

Nominee identity information

nominee holdings concerning non-residents under regulation 14. Prior per-

Sector Regulator Main legislation

Banks and Trust Central Bank of The Banks and Trust

Investment Funds and Securities Investment Funds Act

Insurance Companies and Insurance Commission Insurance Act and

Sector Regulator Main legislation

Financial and Corporate Inspector of Financial and Corporate

Securities Dealers and Securities Securities Industry Act

bogus note 55 bogus note 66

of Practice) issued by the regulator. Specific obligations vary according to the

7. See paragraph 7 of the Securities Commission Guidelines on the Prevention of

69. A SMART fund is required to be registered with the Securities

Anti-Money Laundering/Counter Financing of Terrorism Laws.

8. Where issued by a Regulator that is a “relevant agency” defined as “agencies

Bank’s Guidelines), and AML Codes of Practice issued by the Compliance

Bearer shares (ToR A.1.2)

Partnerships (ToR A.1.3)

(s47). The Partnerships Act predominantly concerns the legal relationship of

Ownership and identity information required to be provided to

Limited Liability Partnerships

Exempted Limited Partnerships

Ownership and identity information required to be held by

Limited Liability Partnerships

Exempted Limited Partnerships

Trusts (ToR A.1.4)

Trust ownership and identity information required to be provided to

Trust ownership and identity information required to be held by the trust

Trust ownership and identity information required to be held by

Licensed Corporate Trustees

for licensees on the Prevention of Money Laundering and Countering the

Private Trust Companies

111. The mechanisms in The Bahamas described in this section ensure

Foundations (ToR A.1.5)

Foundation ownership and identity information required to be held

provided at the time of registration must be advised within 30 days. The